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    WGC: Gas will Transform Mozambique, says ENH

Summary

Three LNG projects could transform Mozambique's fortunes, enabling it to repay debt, build much-needed infrastructure and end fuel poverty.

by: William Powell

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WGC: Gas will Transform Mozambique, says ENH

WASHINGTON DC – The east African state of Mozambique is "on the cusp of receiving huge amounts of cash," which will entirely change the country's image and debt profile, the CEO of state oil company ENH, Omar Mitha, told NGW during the World Gas Conference here June 29.

The country has been in sovereign default since 2016 but is poised to turn into a major gas exporting and consuming nation as the giant discoveries offshore are liquefied and marketed, with output possibly exceeding 60 million metric tons/year, such is the resource base.

Mitha said that the country would be able to develop its energy intensive industry such as aluminium and steel smelting and provide reliable energy for its population, as the three gas export projects come successively on stream. Among the plans are a $7bn gas-to-liquids plant that Anglo-Dutch major Shell could build; and a fertiliser plant.

Because ENH is carried in these projects, financing is not problematic, a banker focused on Africa told NGW. "It is essentially privatised," he said.

The Italian company Eni has taken final investment decision on its 3.4mn metric tons/yr floating liquefaction project costing $4.7bn in all, which could bring in $13bn in tax, royalties and income tax over its lifetime, depending on the assumption about the gas price: "We have three lines of revenues, excluding dividends," Mitha said. That could start up early next decade.

The drawback for the government is that the project is offshore, meaning no local content; but he said at least there would be government take. And Mozambique LNG, the Anadarko-led 12.9mn mt/yr LNG export project, could bring in $50bn. That project has cut $4bn from its estimated costs in the last few years, Anadarko said; it is counting on producing LNG at less than $600/metric ton/year from its Golfinho/Atum fields in Area 1.

There will be growing local content as the projects advance, Mitha said, but initially the skilled labour will have to be brought in. And costs have to be low so that the gas will have a better chance of finding a market, he said.

The third LNG project is Area 4, which is the source also of the gas for the Coral LNG project. The marketing is proceeding but unlike Anadarko's project, Mamba LNG has not yet had government approval and the size is uncertain. However NGW understands that there have been commitments on low costs. ExxonMobil will lead construction and operation of liquefaction trains and related onshore facilities for Mamba LNG project, while Eni will lead upstream developments and operations.

Both have recorded recent successes in these respective areas, Eni with the swift development and production of the Egyptian Zohr field and ExxonMobil with Papua New Guinea LNG. And both Area 1 and Area 4 projects are expecting to take final investment decisions next year, Anadarko going for the first half.