Anadarko: Mozambique Could Become World's Third Largest LNG Exporter

Mozambique could become the world's third largest exporter of liquefied natural gas (LNG), an Anadarko Petroleum Corp. executive told attendees at the Mayer Brown Seventh Annual Global Energy Conference in Houston on Wednesday.

Ramsey Fahel, vice president & general manager – commercial with Anadarko Mozambique, said the company is working the Mozambique's government to establish the framework and fiscal regime for LNG development "of a caliber not seen before in continental Africa."

The company plans to develop two-train LNG facility associated with the Prosperidade discovery, which contains between 17 and more than 30 trillion cubic feet (Tcf) gross recoverable resources. The plant will be situated in the far northern part of the country on the southern side of Palma Bay, which provides a natural shelter from typhoons.

The facility will create the foundation for future LNG trains to be added, Fahel noted.

Fahel acknowledged that Anadarko has set an ambitious schedule for its LNG plans, with a final development decision for Prosperidade expected by late 2013. Anadarko is pursuing this timeline in order to establish a market presence before neighboring Tanzania begins exporting LNG and before LNG projects in Australia and Canada come online between 2016 and 2018. Anadarko is planning to begin sales of LNG exports from its project in 2018, according to a presentation on the company's website

"Mozambique is positioned similar to Qatar in that [it] could potentially supply LNG demand to countries east and west of Mozambique," Fahel said.

However, the regulations in Mozambique are still evolving, and certainty is needed by 2013 in order for making the deadline.

While Asian buyers will likely be the recipients of Mozambique gas, Anadarko's proposed LNG facility will be competing with other projects expected to come online on the West Coast of Canada, the United States and Australia that are coming online in the 2016-2018 time frame, said Toshi Yoshida, a partner in Mayer Brown's Global Energy practice.

Australia has advantages as an LNG exporter to Asia in terms of proximity, its long-term relationship with Asian countries and as a political stable source of LNG. Western Canadian LNG export facilities such as Kitimat offer similar advantages in terms of distance and political stability, Yoshida said.

Many U.S. LNG facilities are disadvantaged geographically as Asian sources of gas due to their locations on the Gulf of East coasts, but offer the advantage of cheaper Henry Hub gas prices.

"U.S. LNG exports will not be a major supplier, but will play a role," said Yoshida.

Rovuma Discoveries Spark New Interest in Mozambique's Gas Potential

While exploration and production activity has been occurring in Mozambique since the early 1960s, the natural gas discoveries made in the Rovuma Basin in 2009 have generated new interest in Mozambique's natural gas potential.

The country already exports natural gas to South Africa and supplies gas to the industrial zone of the nation's capital, Maputo. Discussions are underway for the development of domestic industries in Mozambique such as methanol and fertilizer manufacturing, to absorb some of the new gas supply coming online.

Anadarko also will work to develop a comprehensive plan to grow the country's manufacturing and professional competence, Fahel said.

Anadarko currently is appraising its Golfinho deepwater prospect offshore Mozambique. The Golfinho find is separate from the Prosperidade discovery, with estimated gross recoverable resources of seven to over 20 Tcf of gas.

The company plans to drill the Atum, Black Pearl and Barracuda prospects offshore Mozambique this year, and with more than 20 prospects and leads, sees potential to add significant additional resources.

When asked whether the offshore drilling activity might attract Somalian pirates who have attacked passing vessels and held foreign travelers for ransom, Fahel said that Anadarko has been cooperating with other energy companies and the South African navy to address the issues of security on offshore rigs and facilities.

"We've had a couple of encounters, but piracy is not a major threat," Fahel said.


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