Exxon Beefs Up Mozambique LNG Project to Cut Costs Ahead of Bank Talks
LONDON, July 12 (Reuters) - Exxon Mobil will expand its Rovuma liquefied natural gas (LNG) project in Mozambique by half to cut production costs as the partners prepare to book the plant's supply and formally tap lenders in September, the company told Reuters.
The U.S. oil giant took charge of the East African LNG project's onshore operations following a $2.8 billion deal with Italy's Eni last year, adding to its slate of planned gas projects in Qatar, Papua New Guinea, Russia and the United States.
It now aims to build the world's biggest liquefaction units, or trains, outside Qatar, in Mozambique's remote north, shelving former operator Eni's more modest blueprint in pursuit of cost savings to boost returns on investment.
"The larger train design will lower the unit cost of the Rovuma LNG project and ensure a competitive new supply for the global LNG market," Exxon spokeswoman Julie King said in response to emailed questions.
Under new development plans submitted to the government this week, Exxon's first two liquefaction trains should each produce 7.6 million tonnes per annum (mtpa), with a start date in 2024.
Eni initially planned 5 mtpa trains.
The Italian oil major holds the offshore resource licence to Area 4, which contains some 85 trillion cubic feet of gas in place to be supercooled into a liquid and exported on ships to world markets.
Super-sizing the first two trains means having to renegotiate a resource-sharing deal Eni struck in 2015 with rival LNG project developer Anadarko Petroleum, which owns the neighbouring Area 1 licence, industry sources said.
A geologically porous section of Area 4 covering the Mamba and Prosperidade fields straddles Area 1. This effectively means Exxon-Eni would pump gas away from Anadarko's adjoining reservoir to feed its LNG plant.
"Area 4 and Area 1 stakeholders have agreed on the Unitization and Unit Operating Agreement (UUOA) which has been presented to the Mozambican government for approval," Exxon's King said.
Anadarko spokeswoman Helen Wells said the company was engaging with the government and Area 4 to address any concerns and ensure the UUOA benefits all involved.
Mozambique's two rival LNG projects are ramping up to take final investment decisions (FID) in 2019 and both are teeing up buyers and loans to underpin hefty construction costs.
But there the similarities end.
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