Mozambique to receive US$95 billion in natural gas revenues over 25 years

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Mozambique to receive US$95 billion in natural gas revenues over 25 years

12:43 CAT | 22 May 2019

in file CoM

Mozambique is expected to receive about US$95 billion over the next 25 years in revenues from multinationals’ investments in natural gas exploration, more than seven times the amount of country’s current gross domestic product.

The US$95 billion total is made up of about US$46 billion from the ExxonMobil consortium, announced last week by the government, added to the US$49 billion that the government estimated in June that it would receive during the term of the contracts, according to the Bloomberg financial information agency.

The oil company projects in the north of the country have the potential to transform the Mozambican economy, making the country, along with Qatar, one of the largest exporter of natural gas in the world.

The country, with a current GDP of about US$15 billion, has been in negotiations with ‘hidden debts’ creditors, at the same time that it endorsed the participation of the National Company of Hydrocarbons in the consortia, with a value of U$2.25 billion.

Last week, the Mozambican government approved the Rovuma LNG Development Plan, led by the oil majors Eni and Exxon Mobil, to exploit natural gas in the Mamba zone of Area 4 off the north coast.

This is the third gas exploitation plan approved for the Rovuma basin and should catapult Mozambican GDP to new highs in the next decade.

“Approval of the development plan marks another significant step towards reaching the Final Investment Decision (FID), with construction commencing this year,” ExxonMobil development head Liam Mallon has said.

The same consortium – Mozambique Rovuma Venture (MRV), of which the Portuguese company Galp is also part – had already in 2017 announced its FID for the Coral South zone of Area 4, where natural gas will be extracted through a floating platform, starting in 2022.

While the platform will supply 3.4 million tons (mtpa) of liquefied gas per year, the Mamba zone will produce about 4.5 times more: 15 mtpa is predicted for 2024/25.

“The contracts for the purchase and sale of 100% of the capacity of the plants were submitted to the Government of Mozambique for approval”, the consortium statement released last week added.

“The estimated production of the Area 4 block will generate substantial benefits for Mozambique and the [consortium] partners,” Eni’s Development, Operations and Technology manager Alessandro Puliti said on Tuesday.

The development plan “shows the commitment to form, develop and employ national labour and provide gas to support the industrialisation of Mozambique,” he added.

In this respect, during the production phase, the Rovuma LNG project expects to provide the country with about 17,000 tonnes per year of liquefied petroleum gas (LPG) from Area 4 resources, equivalent to 50% of Mozambique’s current LPG imports.

This “will dramatically improve access to energy”, the consortium adds.

Area 4 partners also plan to distribute around 5,000 gas stoves in the Afungi area, Cabo Delgado province, where the ‘gas city’ is being built, where factories and other infrastructure will be installed to replace the burning the wood.

Area 4 is operated by MRV, a joint venture company comprising ExxonMobil, Eni and CNPC, which holds a 70% interest in the concession for prospection and production in that area.

Galp, KOGAS and Empresa Nacional de Hidrocarbonetos de Moçambique each hold 10% interest.

ExxonMobil will lead the construction and operation of liquefied natural gas production facilities and related infrastructure on behalf of MRV, and Eni will lead the construction and operation of upstream infrastructure, extracting gas from offshore deposits and piping it to the plant.

“This is the third development plan approved in this five-year period to enable the sustainable exploitation of the huge natural gas reserves discovered in the Rovuma Basin,” Minister of Mineral Resources and Energy, Max Tonela, said.

In addition to the two investments in Area 4 (the floating platform in the Coral South zone and wells in the Mamba area), oil company Anadarko is leading a project in Area 1, the final investment decision for which will be announced in Maputo on June 18.

“We want Mozambican entrepreneurs and Mozambicans to be the main beneficiaries,” it said.

Source: Lusa