Anadarko sanctions $20 billion Mozambique LNG development

Anadarko has made a final investment decision for the development of Mozambique’s Offshore Area 1 via the Area 1 Mozambique LNG project. The project, estimated at $20 billion by Wood Mackenzie, can now move ahead to the construction phase.

Anadarko made the official declaration of FID on Tuesday at an event in Maputo, Mozambique, attended by the President of the Republic of Mozambique Filipe Nyusi, the Minister of Mineral Resources Ernesto Max Tonela, and Anadarko’s Chairman and CEO Al Walker, along with representatives from the Area 1 co-venturers.

“This is a historic day for the people of Mozambique,” said President Filipe Nyusi said.  “Today’s sanctioning of the Anadarko-led Area 1 Mozambique LNG project solidifies a path toward the creation of thousands of jobs for our people, significant economic growth for our nation, and the potential to be one of the world’s largest providers of cleaner energy for decades to come. It is truly one of the most important and transformational projects in our country’s history.”

The Anadarko-led Area 1 Mozambique LNG project will be Mozambique’s first onshore LNG development, initially consisting of two LNG trains with total nameplate capacity of 12.88 million tonnes per annum (MTPA) to support the development of the Golfinho/Atum fields located entirely within Offshore Area 1.

“This is an exciting day for Mozambique and for our partnership, bringing us a step closer to making Mozambique’s first onshore LNG facility a reality,” said Anadarko Chairman and CEO, Al Walker.

Anadarko and its partners have secured in aggregate 11.1 MTPA of long-term LNG sales (representing 86% of the plant’s nameplate capacity) with  LNG buyers in Asia and in Europe. Additionally, Anadarko said, the project is expected to have a significant domestic gas component for in-country consumption to help fuel future economic development.

Walker added: “The Anadarko-led Area 1 Mozambique LNG project has come a long way from our first discovery to FID for the construction of the initial two-train development project. I want to say a collective ‘thank you’ to the world-class LNG team we have assembled at Anadarko, our co-venturers, long-term foundation customers, lenders, the people of the Cabo Delgado region, and the Government of Mozambique.

Related: Anadarko dishes out contract awards for Mozambique LNG development

“As the world increasingly seeks cleaner forms of energy, the Anadarko-led Area 1 Mozambique LNG project is ideally located to meet growing demand, particularly in expanding Asian and European markets. We look forward to safely executing the next phase of this project for the long-term benefit of Mozambique, its people, our partnership, and our customers,” Walker said.

Anadarko, expected to be taken over by Oxy, said that following the FID, the project expects to soon issue Notices to Proceed under the terms of the previously executed engineering, construction, procurement and installation contracts and finalize financing.

Now is Mozambique’s time

Jon Lawrence, an analyst with Wood Mackenzie’s sub-Saharan Africa upstream team, said: “Mozambique LNG is one of two LNG mega-projects that have been seeking sanction for over four years in Mozambique.

“The other is the ExxonMobil-led Rovuma LNG development. With strong LNG demand growth out of Asia, now is Mozambique’s time.

“At US$20 billion, today’s FID is the largest sanction ever in sub-Saharan Africa oil and gas.”

He added: “We believe that, from the early 2030s, state revenue from Mozambique LNG alone will reach US$3 billion per annum, single-handedly doubling today’s revenue, as calculated by the IMF and World Bank.”

Related: McDermott, Saipem, Chiyoda JV bags Anadarko Mozambique LNG job

Lawrence said that Wood Mackenzie expects the two Mozambique LNG projects to be the second and third most valuable oil and gas sanctions taken this year, after Arctic LNG-2 in Russia.

The company has recently signed several LNG offtake agreements in preparation for the Final Investment Decision for the project. The buyers include  CNOOC, Tokyo Gas, Centrica, Shell, Tohoku, Bharat, and EDF.

Frank Harris, Head of LNG Consulting, at Wood Mackenzie, said: “Flexible commercial arrangements, including an innovative co-purchase agreement with Tokyo Gas and Centrica, have been instrumental in securing the project a roster of high-quality customers in a crowded LNG market.”

As Offshore Energy Today previously reported, subject to the completion of the takeover of Anadarko by Oxy, Oxy will sell its Africa assets – including the Mozambique LNG project – to France’s Total in an $8.8 billion deal.

Offshore Energy Today Staff

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