Mining & Energy
Over a billion Cahora Bassa shares sold
Research company GlobalData said in a Tuesday note Mozambique is set to become one of the world’s top 10 liquefied natural gas producers over the next few years. By the mid-2020s, over 30 million tons per annum (Mtpa) will come on stream, thanks to the ultra-deepwater Rovuma Basin, where 125 trillion cubic feet (Tcf) of resources have been discovered.
Participants in the development are progressing towards final investment decision (FID) for onshore terminals, with capital expenditure expected to come in around $40 billion.
Break-even gas prices will be $4-5 per thousand cubic feet (Mcf) compared to Japan spot LNG prices of $9.24/Mcf, due to relatively low expected capital expenditures and upstream cost compared to other projects around the world.
By the mid-2020s, when over 30 million tpy of LNG comes on stream, Mozambique is expected to become one of the world’s top 10 largest LNG producers, on a par with capacity in African leaders Nigeria and Algeria.
The feed gas for new LNG projects will come from the ultra-deepwater Rovuma Basin, where over 125 trillion ft3 of recoverable natural gas resources have been discovered to date. This consists of 75 trillion ft3 in block Area 1 and 50 trillion ft3 in block Area 4. Participants in Area 1 and 4 are now progressing towards final investment decisions (FID) for the onshore LNG terminals.
Cao Chai, Oil and Gas Analyst at GlobalData, says: “The development break-even gas price of around US$4-5 per thousand ft3 for the onshore LNG projects in Mozambique is competitive compared to current Japan spot LNG prices of US$9.24 per thousand ft3. This is due to the relatively low expected CAPEX per million tpy in comparison to other integrated LNG projects around the world, and the low upstream cost compared to non-integrated LNG projects in the Americas.”
Both external and internal Mozambique-specific challenges have slowed progression of LNG developments in the country. However, positive signs such as securing additional gas sales and purchase agreements have formed the majority of the activity from Mozambique and Rovuma LNG participants so far in 2019. These contracts are a key part of the projects progression towards the construction phase, as they provide some certainty about future revenues to underpin the massive capex of nearly US$40 billion required to bring these facilities online.
Chai concludes: “The advancement of LNG business in Mozambique will transform the country to a major global LNG supplier. It will also bring direct revenue to Mozambique government and promote the growth of local industries through a domestic gas component of the initial project and follow-on expansions. Furthermore, construction on the LNG megaprojects is expected to last for over a decade providing significant employment and training opportunities for Mozambicans.”
Source: Kallanish Energy / Hydrocarbon Engineering
Mozambique may become one of the world's largest gold producers