• Facebook Basic Square
Follow Us
Please reload

Search By Tags

June 4, 2019

Please reload

Recent Posts

Anadarko in talks with Japanese JV Jera for Mozambique LNG deal

June 26, 2015

1/2
Please reload

Featured Posts

Moz LNG deals stuck on domestic market offtake

November 14, 2015

 

The price and volume of gas offtake for Mozambique’s domestic market from Offshore Area 1 are now major sticking points in negotiations between Anadarko and Maputo in the development of the 12 mtpa project, sources have told Interfax.

When oil was priced above $100 per barrel, the United States-based independent was happy to offer generous terms for gas from its giant offshore discoveries in northern Mozambique.

However, now the profits on the estimated $26 billion project are looking slimmer, Anadarko is offering a quarter of the volume the government originally bargained for and is no longer able to offer it at such a low cost, Interfax understands.

"Anadarko can’t afford to lose money on the gas delivered into the domestic market, so it needs to be delivered at least at cost – maybe a little bit more," one Maputo-based source who has spoken to the company told Interfax.

Minister of Economy and Finance Adriano Maleiane and Minister of Minerals Resources and Energy Pedro Couto are pushing against these new tougher terms. Securing cheap domestic gas is vital for Mozambique’s industrialisation programme, which will boost growth and employment in one of the world’s poorest countries.

Neither Anadarko nor Eni, operator of Offshore Area 4, are obliged to deliver any domestic market gas. Mozambique’s new petroleum law stipulates 25% of all gas production should be earmarked for the domestic market, but the exploration and production concession contracts the companies operate under were signed before the law came into force and have been grandfathered.

 

 

Map of the Rovuma Basin Area 1

There are several projects the government is keen to promote – chief among them a fertiliser plant by Norwegian fertiliser giant Yara large enough to service most of sub-Saharan Africa, and a $7 billion gas pipeline running the length of the country and into South Africa.

Interfax understands the government is also keen to push on with a GTL facility proposed by Shell that would help reduce Mozambique’s costly diesel import bill as well as generate export revenues. The project looks increasingly attractive at a time when the government is struggling with a balance of payments crisis brought on by a decline in the prices of commodities it exports and the weakening of its currency against the dollar.

However, a GTL facility will require at least 85 billion cubic metres of gas, and Anadarko is reluctant to offer cheap feedstock to subsidise the development of such a plant when the economics of its own project have become harder to balance, the source told Interfax.

While producing fuel in the country will help lower the government’s debt, "without the LNG project there won’t be any gas at all, so the government’s focus needs to be on the LNG first, and then on downstream developments", the source added.

In contrast, a fertiliser facility is only likely to require up to 28 bcm and could be vital for stimulating growth in the agricultural sector. Mozambique has one of the least productive agriculture economies in the world, partly because of its limited use of fertilisers.

Yara – which told Bloomberg in 2014 that it was looking to make a $2.5 billion investment in a fertiliser plant in either east or west Africa once gas reserves come onstream at the end of the decade – has yet to commit to a project in Mozambique, a company spokesperson told Interfax. But there are at least three other plants proposed in Mozambique’s Gas Master Plan.

Pipeline plans

There also seems to have been a resurgence of interest in the gas pipeline project to South Africa, following President Filipe Nyusi’s visit to Pretoria in October.

While analysts have said the 2,600 km pipeline, which will link Mozambique’s Rovuma Basin fields with Richards Bay, makes little sense for South Africa from an economic or security of supply perspective, it is considered vital for promoting the industrialisation of cities along the pipeline route in Mozambique, as well as facilitating exports to Malawi and Zimbabwe.

However, there seems to be little movement on the project. A study by investment group Gigajoule and national oil company ENH into the construction of a 2,100 km, 10 bcm/y pipeline running from Cabo Delgado to Maputo and regional markets was supposed to have been presented to the government in mid-2014, but is still under way.

South Africa-based independent SacOil, South African state-owned investment management company Public Investment Corp. and the Instituto de Gestão das Participações do Estado – a company that manages Mozambique’s equity participation in strategic projects – have yet to start a pre-feasbility study into the construction of the South Africa pipeline, Tariro Mudzimuirema, a financial director for SacOil, told Interfax on Wednesday.

Source: Interfax Global Energy

Please reload

"hotel accommodation palma mozambique"

Palma accommodation. Your hotel lodge in Palma, Mozambique