Japan drives attention to Mozambique natural gas

Japan, the world’s biggest importer of liquefied natural gas, has been seeking new energy sources since the Fukushima nuclear disaster. Meanwhile, with East Africa’s LNG markets have recently arrived on the world energy map. Mozambique aims to use this convergence to its advantage and be catapulted from one of the region’s poorest countries into a rapidly growing economy. However, Mozambique's LNG can meet Japan’s demand only if the country can manage its relations with ENI and Anadarko.

ENI and ANADARKO

In last thirty months, the US’ Anadarko and Italy’s multinational gas and oil company ENI made very important discoveries in offshore areas in the north of Mozambique and delivered 12 successful offshore wells. As result, Japanese Prime Minister Shinzo Abe announced Japan will invest 672 million USD in Mozambique projects in the next five years. The objective is secure natural gas supplies for Japan.  Mozambique and Japan have seen their governments sign protocols to strengthen the bilateral relationship. 

In this objective of strengthening ties with Asia, Mozambique’s state spokesman announced an expected greater share of profit from the natural-gas discovery. In November, 2013, Paulino Gregorio, Empresa Nacional de Hidrocarbonetos’ Director of Engineering and Projects Engineering stated, “We are trying to see how we can increase our participation in the projects.”  Mozambique’s national oil company’s objective is to increase its stake in fields operated by Anadarko Petroleum Corp. and Eni SpA.  According to the ENH’s statements Mozambique’s offshore fields may hold enough gas to meet global demand for more than two years.

In December 2013, Eni signed a deal with Anadarko to develop common natural gas reserves offshore of Mozambique, as well as options for liquefied natural gas. Eni's discovery last year of at least 7 trillion cubic feet of gas offshore Mozambique was considered one of its largest ever.

Following the ENH’s statement, according to Mozambique’s state spokesman, international banks have approached ENH to help arrange financing for its stake in the offshore gas and LNG development. – without identify any of them. Beside this ambition of increasing shares,  the  company also plans an industrial zone around the LNG plants and a 2,100-kilometer north-south pipeline to help nurture local industries, the spokesman said.

Sub-Saharan Africa’s oil and gas map will be redrawn over the next decade as the region’s traditional crude producer nations, Nigeria and Angola, are joined by East African nations where unconventional techniques are opening new horizons.Up to 70 oil and gas discoveries have been made in sub-Saharan Africa over the past 5 years, principally in Uganda, Mozambique and Tanzania.  Prior to 2012, Mozambique’s gas reserves were estimated at only about 5.5 tcf. As a result of unconventional developments, a substantial production increase is expected in the region by 2019, when LNG plants are expected to come on-stream.

LNG UNITS 

Mozambique plans to build four LNG units with a total capacity of 20 million metric tons a year by 2018, making it the world’s largest LNG export site after Ras Laffan in Qatar. Explorers believe the Mozambique’s gas reserves can support up to 6 LNG trains and are set to stake as much as 5 to 8 billion USD over the next five years in projects. As gas discoveries have been made, Mozambique’s national energy companies have sought a larger portion of future revenues as demand from Asian markets continues to climb.

Apart from the benefits of the upstream activities Mozambique is also expected to benefit from a raft of down-stream opportunities, such as the construction of fertilisers, petrochemicals, methanol, and gas-fired power plants. 

Olgu Okumus

olgu.okumus@sciences-po.fr