Mozambique Project Targets 50 Million Metric Tons of LNG

Source: epmag.com

Commercial production of LNG is scheduled to begin in 2018 as Eni and Anadarko will jointly develop the 10-train Afguni LNG Project in Mozambique.

Competition in world LNG markets is about to get a lot more exciting with the signing of a heads of agreement (HOA) between Anadarko Petroleum Corp. and Eni for the development of 100 Tcf to 175 Tcf of natural gas reserves offshore Mozambique. The initial development will include four LNG trains, each with a capacity of 5 million metric tons per year (MMmt/y), with first delivery of LNG set for 2018.

The addition of 20 MMmt/y of LNG would roil world markets even more with increased competition for customers. Development of these huge East African reserves could have an impact on proposed LNG projects in Australia, Canada and the US. If nothing else, the additional LNG could lead to a buyer’s market, resulting in lower LNG prices.

Given that customers such as Korea Gas Corp. (KOGAS) and PTT Exploration and Production Public Co. Ltd. (PTTEP) are participating in the project, there would be an expectation of getting a good deal on LNG supplies.

The HOA is among the first steps in facilitating development of offshore Area 1, operated by Anadarko, and Area 4, operated by Eni along with common onshore LNG liquefaction facilities in the Cabo Delgado province of northern Mozambique. A final investment decision is expected in 2013.

“Reaching an HOA with Eni is a significant step that preserves the project timeline,” said Anadarko President and CEO Al Walker. “We expect the HOA to lead to a unitization agreement to further facilitate the efficient development of the common resources, as well as the independent reservoirs on both blocks, enabling enhanced economies of scale through shared infrastructure and facilities.”

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