Mozambique decision in 2016

Anadarko Petroleum is planning to make a final decision next year on how it will develop vast gas discoveries that the US Company has made off the east coast of Mozambique.There have been concerns that the collapse in oil prices could cause big delays in the commercialisation of Mozambique’s liquefied natural gas projects, but Al Walker, Anadarko’s chief executive, said the company was on track to start producing LNG by late 2020.Pressing ahead with Anadarko’s project in the Rovuma Basin in the Indian Ocean hinges on the company taking a final investment decision, this had been expected this year.This decision is now due to take place in the second half of next year, Walker said, following important milestone agreements with the Mozambique government and Eni, the Italian oil company that has also made large gas discoveries in the Rovuma Basin.

Walker told the Financial Times that the agreements announced last Thursday were a “very important step in the direction of reaching [a final investment decision] we hope in the second half of 2016”.Anadarko has discovered more than 75tn cubic feet of gas in the Rovuma Basin, while Eni has identified about 85tn cubic feet. Combined, the resources have the potential to transform Mozambique into one of the world’s top LNG producers.Mozambique is meant to be Anadarko’s first foray into LNG. The first phase of the project — expected to cost at least $15bn — involves the construction of two LNG trains that turn gas into liquid for transport, with output expected to reach 12m tons per year.“We look at LNG as an important plank of our business platform. . . we want to build this in a time-efficient and cost-efficient manner,” said Walker. “By the end of the 2020s, as we approach 2030, Mozambique probably will be second only to Qatar in terms of providing lowest-cost LNG in the world.”He predicted that Mozambique could eventually be producing close to 50m tons of LNG per year — or in excess of that — as the gas fields are tapped. Anadarko has preliminary agreements with customers for them to buy about 75 per cent of the LNG generated by the first phase of Anadarko’s project, said Walker.However, the slump in crude prices since last year has prompted many energy groups to delay or shelve projects, and this has generated concerns that Mozambique’s LNG plans could be held back. The price of LNG in the Asian markets that are being targeted by Mozambique is tied to the value of crude.