Eni signs major gas sales deal as Coral FLNG sanction looms
- Business & Finance
Italian oil giant, or in this case gas giant, Eni, has made a major step ahead of the expected final investment decision for the development of the giant Coral gas field offshore Mozambique.
Namely, Eni and its partners in the Area 4 concession have managed to find a major customer for the gas to be produced there – British energy major BP.
Under the agreement, BP will buy all the LNG to be produced by Eni’s Coral South Floating LNG unit, which will be installed offshore Mozambique, over a period of 20 years. Commercial details of the agreement were not disclosed.
The agreement, which has been approved by the government of Mozambique, is conditional on the Final Investment Decision (FID) being taken for the project.
As for the date of the expected Final Investment Decision in a statement on Tuesday, Eni said the FID is expected within 2016. In a separate announcement BP says the FID is “currently expected by the end of 2016.”
To remind, Reuters recently cited sources close to the matter who said that Eni was expected to sanction the project on or around October 31.
The Coral South Floating LNG facility is expected to have a capacity of more than 3.3 million tonnes per year.
While we cannot know for sure before the official FID, Samsung Heavy Industries is expected to scoop the FLNG construction contract. At least according to South Korea’s news agency Yonhap, which made the claim back in July.
BP will use LNG from the contract to help meet its global supply commitments.
The FID will represent the first phase of development of 5 trillion cubic feet of gas in the Coral discovery in deep waters some 80 kilometers offshore of the Palma bay in the northern province of Cabo Delgado.
The giant discovery, made in May 2012 and outlined in 2013, proved the existence of a high quality field of Eocenic age with excellent productivity. It is estimated to contain 15 trillion cubic feet of gas in place, wholly located in Area 4.
Commenting on the gas sales and purchase deal, Paul Reed, Chief Executive of BP’s supply and trading business, said: “BP is pleased to play a key role in enabling Mozambique to be an LNG exporting country. The agreement adds to the diversity of our natural gas portfolio beyond the end of the decade, further enhancing our ability to meet the needs of our customers.”
The Coral is slated for start-up in 2021, with the first cargo expected in 2022 during the commissioning phase.
Eni operates the offshore Area 4 with a 50 percent indirect interest, owned through Eni East Africa (EEA), which holds a 70 percent stake of Area 4. The remaining 20 percent stake in EEA is owned by China’s CNPC. EEA’s partners in Area 4 are Galp, Kogas and ENH with a 10% stake each.
Offshore Energy Today Staff