Mozambique gas projects

 

Mozambique is an African country and home to a population of 29 million people.  Its name came from its first known ruler, a Muslim Arab emir named Mussa ibn Bique. The Portuguese started referring to the region as the “Lands of Mussa ibn Bique” and from there the name was simplified to Mozambique.   Furthermore, the discovery of immense natural gas reserves one decade ago created hope that the economic situation and consequently, living standards of the population, will improve dramatically.  The impact of natural gas exploration in Mozambique will also significantly affect the country’s GDP.   There will be an impact to other countries as well.

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Most of the natural gas discoveries were found in the Rovuma Basin, offshore Cabo Delgado state, northeast of Mozambique, during five years of exploration and appraisal activities. The Rovuma Basin is located close to the border between Tanzania and Mozambique, at the Rovuma Delta.    Liquefied Natural Gas could possibly be Mozambique’s Gold Mine.

https://umaizi.com/liquefied-natural-gas-could-be-mozambiques-gold-mine/

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MOZAMBIQUE PROJECTS

Once developed, the 15.2 million tonnes per annum project, expected to attract between $27 billion and $32 billion in investment, will monetise 2.6 billion cubic feet per day of Mozambique’s offshore LNG resources, add $15 billion to $18 billion per annum to Mozambique’s gross domestic product (GDP), and drive Mozambique towards being, in time, the world’s fourth-largest producer of LNG.

“The first phase of Rovuma LNG has the potential to transform the Mozambican economy and turn the province of Cabo Delgado into one of the world’s fastest growing regions, with every prospect of developing supporting industrial and agricultural value chains,” says Dele Kuti, head of oil and gas for Standard Bank Group.

With yet more exploration rounds to come, some 150-trillion cubic feet (Tcf) of gas has already been discovered and there is a growing expectation that Mozambique will, in the coming decades, compete with Russia to become the world’s fourth-largest liquefied natural gas (LNG) producer after the US, Qatar and Australia.   The smallest of these projects, the $4.7- billion Coral South floating liquefied natural gas (FLNG) facility, is well advanced. The vessel, which is under construction mostly in Asia, will be 432 m long and 66 m wide, weigh about 220 000 t and be able to house up to 350 people in its eight-storey accommodation module.

From an employment perspective, it is anticipated that Rovuma LNG will employ approximately 20,500 construction workers and 1,300 operational workers. The project’s activities are also expected to create many more additional employment opportunities from various value chain and reinvestment activities associated with the support, supply and profits arising from the commercial operation of Rovuma LNG.

https://www.howwemadeitinafrica.com/how-the-rovuma-natural-gas-project-could-transform-mozambique/63077/

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This domestic gas could be used inside Mozambique to produce electricity, fertilisers and chemicals, as well as to supply manufacturing enterprises that require gas as an energy source or as a reductant. Regionally, the gas could replace diesel in power plants and heavy-fuel oil in marine transport.

http://m.engineeringnews.co.za/article/planets-aligning-for-sa-firms-as-huge-mozambique-gas-projects-get-moving-2019-11-22-1/rep_id:4433

Mozambique could supply more than ten countries in the region, including South Africa, with gas. “I can think of few better opportunities for deploying small-scale LNG than in Africa, which could help countries to cost-effectively introduce lower volumes of gas into their energy and electricity systems than has hitherto been possible.”

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Some 150-trillion cubic feet (Tcf) of gas has already been discovered and there is a growing expectation that Mozambique will, in the coming decades, compete with Russia to become the world’s fourth-largest liquefied natural gas (LNG) producer after the US, Qatar and Australia.   Projects valued at some $54-billion are either being implemented or are awaiting final sanction.

The smallest of these projects, the $4.7- billion Coral South floating liquefied natural gas (FLNG) facility, is well advanced. The vessel, which is under construction mostly in Asia, will be 432 m long and 66 m wide, weigh about 220 000 t and be able to house up to 350 people in its eight-storey accommodation module.

It will be the first FLNG vessel to be deployed in the deep waters of Africa and will be anchored at a water-depth of about 2 000 m. Construction work on the Coral South FLNG started in 2018 after Eni, of Italy, announced its final investment decision (FID) in June 2017. First gas is expected in June 2022, after which the plant will be ramped up to a steady state of 3.4-million tons a year.

The real ‘game changers’, however, will be the onshore megaprojects: Mozambique LNG, with a yearly capacity of 12.9-million tons, and Rovuma LNG, which will be ramped up to a yearly nameplate capacity of 15.2-million tons.

The FID on the $20-billion Mozambique LNG project was taken in June by Anadarko, which was bought by Occidental for $55-billion two months later. Following the transaction, Anadarko’s 26.5% interest in the Mozambique LNG project was sold to Total for $3.9-billion. The Mozambique LNG project includes the development of the Golfinho and Atum fields, located within Offshore Area 1, and the construction of a two-train liquefaction plant. Area 1 contains more than 60 Tcf of gas resources, 18 Tcf of which will be developed with the first two trains. The project is expected to enter production by 2024.

Still awaited is the FID on ExxonMobil and Eni’s $30-billion Rovuma LNG development, which is expected during the first half of 2020. The project will extract gas from the deep water Area 4 block, which contains more than 85 Tcf of natural gas.

Standard Bank oil and gas sector specialist Paul Eardley-Taylor tells Engineering News that yet further LNG trains and projects are likely to follow. In fact, the bank is convinced that, in the longer term, Mozambique’s LNG production will grow to about 90-million tons, the equivalent of three-million barrels of oil a day.

The International Gas Union’s 2019 ‘World LNG Report’ indicates that Qatar remained the largest exporter in 2018, with exports of 78.7-million tons, followed by Australia (68.6-million tons), Malaysia (24.5-million tons) and the US (21.1-million tons). Global LNG trade rose to 316.5-million tons last year.

Eardley-Taylor says that, by 2024, Mozambique could have four onshore LNG trains operational, along with the FLNG ship. He expects that up to five additional onshore LNG trains could be operational by 2028/29, however, partly driven by the underlying legal requirements associated with Mozambique’s exploration and production concession contracts.

Should the investments materialise, the bank estimates that the FID commitments could be as large as $128-billion by 2025. Mozambique’s gross domestic product currently stands at less than $14-billion.

Fundamental Shift

In the medium term, major agriculture and fisheries opportunities are also expected to arise. “A major greenfield value chain must be created in a remote area from a standing start. For example, just to feed the workers associated with the projects will require some two-million chicken eggs every month, which translates into 60 000 chickens laying 1.2 eggs each and every day.”

Africa House directors Duncan Bonnett and Roelof van Tonder are equally enthusiastic, having recently facilitated an exposure tour of Mozambique’s gas projects for over 40 South African businesspeople.

Despite South Africa’s proximity and an indication that $1.5-billion of South African content could be treated as Mozambique content as part of a broader $5.5-billion local-content threshold set for the initial projects, the benefits are unlikely to arise without active engagement.

“South Africans are not only failing to grasp the scale of the opportunity, but opinion among South African firms is also fairly jaded, possibly because it has taken some time for the energy companies to reach FIDs. But the projects are real, as are the opportunities, even if South African firms are not part of the initial engineering, procurement and construction joint ventures appointed to build them,” Bonnett adds.

He is somewhat heartened, though, by recent Department of Trade, Industry and Competition efforts to raise awareness, with Trade, Industry and Competition Minister Ebrahim Patel stating in July that government would help mobilise South African companies to supply R8-billion worth of goods and services to the projects, partly underwritten by the Export Credit Insurance Corporation.

The LNG developments have the potential, Mackay says, to add $24.5-billion yearly to Mozambique’s gross domestic product (GDP) – growth that could open new marketplaces for South African-made products.

Energy Integration

This domestic gas could be used inside Mozambique to produce electricity, fertilisers and chemicals, as well as to supply manufacturing enterprises that require gas as an energy source or as a reductant. Regionally, the gas could replace diesel in power plants and heavy-fuel oil in marine transport.

Eardley-Taylor views the gas investments as a significant regional-integration opportunity – one that could catalyse the recently ratified African Continental Free Trade Agreement and be further amplified by the emergence of technology solutions that are increasing the commercial viability of small-scale LNG trade.

Mozambique, he says, could supply more than ten countries in the region, including South Africa, with gas. “I can think of few better opportunities for deploying small-scale LNG than in Africa, which could help countries to cost-effectively introduce lower volumes of gas into their energy and electricity systems than has hitherto been possible.”

From a supply perspective, the continent’s options will be increased in the coming decade by the introduction of LNG export terminals in Mozambique, Senegal and Mauritania. “We see the whole African coastline as being able to be served by the early to mid-2020s.”

On the demand side, meanwhile, several countries are looking to introduce gas as a way of displacing expensive diesel generators.

“Alongside the jetties catering for the large intercontinental vessels, there could be smaller terminals catering for smaller vessels that can do the milk run up and down the coast, or to nearby islands.”

The limited shipping distance from Mozambique will help South Africa secure relatively favourable delivered ex-ship prices. More importantly, though, is the fact that South Africa’s high-demand winter period does not coincide with the northern hemisphere’s winter peak. “This implies that South Africa can make competitive LNG purchases during periods of increased LNG market liquidity and even take risks on spot pricing.”

Few, if any, of these prospects will materialise, however, unless South African businesses wake up to the enormous opportunity set to arise across its north-eastern border. “There is a fundamental change in the nature of the economic opportunity right next door to South Africa. It’s worth exploring.

http://m.engineeringnews.co.za/article/planets-aligning-for-sa-firms-as-huge-mozambique-gas-projects-get-moving-2019-11-22-1/rep_id:4433

 

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READ MORE:

The media reported during May 2019 that the government of Mozambique has approved the development plan for the Rovuma LNG project, according to Mozambique Rovuma Venture.    This will produce, liquefy, and market natural gas from the deepwater Mamba fields in the Rovuma basin in the Area 4 block offshore Mozambique, two of which straddle the boundary with neighboring Area 1.

Mozambique Rovuma LNG development plan

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Given the increasingly crowded LNG market, Mozambique must minimise delays in developing its projects if it is to gain from the existing dynamics of the market.

Anadarko’s Palma Afungi LNG plant in Northern Mozambique

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Italian engineering, procurement, and construction (EPC) contracting giant Saipem, in a joint venture with America’s McDermott International and Japan-headquartered  Chiyoda Corporation, has reached an agreement with Area 1 Concessionaires – a wholly owned subsidiary of Anadarko Petroleum Corporation for the development of Mozambique Area 1 Liquefied Natural Gas (LNG).

Saipem-led joint venture awarded Anadarko’s gas project in Mozambique

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Russian military in Mozambique
Russian military and Mozambique (gas)
and
Russia in Africa – BRICS – Mozambique (Cabo Delgado)

 

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