BP To Buy All Coral LNG Output
BP has contracted to buy all of the LNG from the Eni-operated Coral floating LNG project off Mozambique.
The UK major said it entered into a sales and purchase agreement October 4 “to purchase 100% of the LNG produced by the EEA-operated Coral South floating LNG facility expected to be installed offshore Mozambique” for a 20-year period. It said that commercial details of the agreement were not disclosed
Eni East Africa (EEA) is operator with 70% of Mozambique Area 4 Block (which includes Coral); its partners each with 10% are Portugal’s Galp, South Korean state Kogas and Mozambican state ENH. As Chinese state CNPC through EEA has a 20% indirect interest in Area 4, Eni’s Area 4 stake is 50%.
BP said the agreement, which has been approved by the government of Mozambique, “is conditional on the final investment decision (FID) being taken for the project, which is currently expected by the end of 2016.” It said that Coral South FLNG’s capacity is expected to be above 3.3mn mt/yr.
“BP is pleased to play a key role in enabling Mozambique to be an LNG exporting country; the agreement adds to the diversity of our natural gas portfolio beyond the end of the decade, further enhancing our ability to meet the needs of our customers,” said Paul Reed, head of BP’s supply and trading business. BP said it will use LNG from the contract to help meet its global supply commitments.
It has been widely reported for months that BP had agreed to lift the entire volume from Coral, but neither BP nor Eni would confirm this. Signature of a deal now may mean that FID is not far off. Eni was reported to have met with bankers in London last month to secure financing of the roughly $4.5bn deepwater FLNG project. Eni’s original target for FID was mid-2015, but this slipped a number of times.
View of Maputo from the sea (Photo credit (c) Gustavo Sugahara)
Eni commented: “Through this agreement the Area 4 partners have achieved another fundamental milestone for the execution of the Coral South development project, following the approval in February 2016 of the Plan of Development by the Government of Mozambique. Eni is the operator of Area 4 with a 50% indirect interest, owned through EEA.”
The next stage towards FID is expected to be an agreement by Eni to farm down its 50% indirect stake, with most bets being on ExxonMobil partnered by Qatar Petroleum.