Mozambique's LNG Ambitions Taking Shape, Gradually

“We launched the tender for the EPC contract … we are positive towards reaching FID [final investment decision] in the second half of 2015,” Roberto Marino, Eni’s executive vice president for Procurement commented Oct. 30 on the firm’s third quarter results.

Eni indicated in its outline of the company’s strategy for 2014-2017 in mid-February that development of the straddling resources in Area 4 will require 15 Mtpa of plant processing capacity. This comprises an onshore LNG train and two floating liquefied natural gas (FLNG) facilities.

On the Coral field project in Area 4, Eni has commenced the process to reach FID for its development. To expedite development of the project, the operator has contracted three consortia in May to undertake FEED for a FLNG facility.

The KD Consortium, consisting of KBR Inc. and South Korea’s Daewoo Shipbuilding & Marine Engineering Company, Ltd. (DSME), was one of the FEED participants, with the successful contractor selected for the engineering, procurement, construction, installation and commissioning (EPCIC) contract to build the FLNG vessel.

Potential Economic Bonanza for Mozambique

Development of the planned LNG projects in Mozambique could provide economic boom to the country. For instance, the Area 1 project using six LNG trains could generate an additional $39 billion to Mozambique’s economy by 2035 and contribute to growth in per capita GDP from $650 in 2013 to $4,500 in 2035, the Standard Bank of South Africa Ltd. projected in its July 31’s “Mozambique LNG: Macroeconomic Study.”

Other potential benefits from the Are 1 Mozambique LNG project are:

• large employment opportunities, totaling over 700,000 jobs by 2035 (with no construction delays). Of these, only 15,000 are directly associated with the LNG project, with the rest being indirect and induced jobs throughout the economy
• a current account surplus of over $16 billion per annum
• infrastructure improvements through direct, indirect and induced investments will include expanded transport infrastructure including air, roads and ports as well as improved water and electrical distribution systems and social support systems such as housing, health care facilities and schools
• large financial gains for the government in the range of between $67 billion and $212 billion over the life of the project, depending on how many trains are ultimately constructed

The country’s national oil company Empresa Nacional de Hidrocarbonetos E.P. (ENH), with a 15 percent and 10 percent stakes in Areas 1 and 4 projects, respectively is expected to take a leading role in developing the local petroleum industry.