Anadarko races to bring Mozambican gas find on stream

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Anadarko races to bring Mozambican gas find on stream

9:07 CAT | 05 Feb 2016

Bloomberg / The International Monetary Fund projects liquefied natural gas investment of more than $100bn in Mozambique.

Mozambique and Anadarko Petroleum are racing to tap gas from one of the biggest discoveries in decades, as a global glut looms.

After making its initial discovery six years ago in the Rovuma basin off, Mozambique’s northern coast, Anadarko has yet to make a final investment decision on a $15bn liquefied natural gas project.

That decision might come this year, as competition from US and Iranian supplies intensified in export markets, said state-owned partner Empresa Nacional de Hidrocarbonetos (ENH).

“Unless we speed the process, we could lose the opportunity,” ENH chairman Omar Mitha said. The former deputy minister of trade and industry said ENH was in discussions with the government about it being time “to get ready with all the contracts, the legal framework (and) the resettlement process”.

With the International Monetary Fund projecting liquefied natural gas investment of more than $100bn in Mozambique and the possibility of supplying gas to the domestic market, the discoveries have the potential to help transform one of the world’s poorest countries.

While Texas-based Anadarko has joined oil majors in curbing investment as crude slumps, the company said on Tuesday that it hoped to conclude negotiations with the Mozambican government this year.

Anadarko needed to finalise legal issues, including marine concessions that dictate ownership of the planned export jetty in Cabo Delgado province, and complete offtake agreements, before taking a final decision, John Peffer, the company’s manager in Mozambique, said.

“The key is to finish the legal and contractual framework as quickly as possible, as this is a critical element in providing project certainty and securing long-term economic value,” Mr Peffer said.

Anadarko, which owned 26.5% of the project, and its partners also needed to obtain approval for resettling about 500 people at the project site, Mr Peffer said.

Despite pricing pressures as crude slumps, the company remains confident about the prospects in Mozambique. “The size of this asset, reservoir quality, distance to shore, proximity to the market and progress with the government will enable this project to differentiate itself and compete in today’s market,” Mr Peffer said.

Source: Business Day Live / Bloomberg