Advisory Board Member attends Mozambique Gas Summit

The Mozambique Gas Summit is in its sixth year and has grown in stature and attendance, as the development of Mozambique massive gas reserves in the Rovuma Basin finally look set for entry into the engineering, construction and operations phases.

Our Advisory Board member John Henderson attended the summit again this year and has noticed some changes from earlier years.  When the bullish outlook for Mozambique gas and LNG was overshadowed by downward pressure on oil prices, this was made worse by Mozambique’s recent debt scandal, which saw the country’s fortunes dramatically reverse.

This year’s summit was able to celebrate Total/Anadarko’s FID announcement made in July this year, for its 12 MTPA ‘Mozambique LNG’ development.  The country is looking forward with confidence to another announcement next year from the Exxon Mobil-lead consortium which plans a 15MTPA LNG plant, labelled the Rovuma LNG Project.  This in on top of a 3MTPA Floating LNG ship (‘Coral South’ project) already under construction following ENI’s FID in 2016.  Production should come on line from 2022 through 2025.  In total this represents 30MTPA of LNG, supplied from a gas-in-place Resource of 180 Trillion cubic feet, requiring a combined capital spend of over US$55 billion.  On these numbers, Mozambique will rank 3rd or fourth in the list of the world’s top LNG suppliers, just in time for a predicted Global LNG undersupply.

“It is worth noting that the two major projects have allocated 400 to 500 million standard cubic feet per day of gas for domestic market use.  There is also a concentrated effort to both rationalise and pre-empt the infrastructure needs for both projects. In this way,  hopefully learning something from Australia’s Gladstone’s LNG projects, which are regularly flagged in seminars and conferences as a ‘what not to do’  example of laisse-faire government attention and an isolationist approach from each of the LNG developers to collaborating on common infrastructure such as ports and pipelines.”

If presentations by the likes of Chairman Mr Omar Mitha from ENH, Mozambique’s National Oil Company are to be accepted, Mozambique is actively pursuing the early development of common infrastructure for two admirable reasons of facilitating synergies that lower production costs; providing National Content opportunities for a poor and undeveloped nation.

As always, for such large resource developments there is a fine line between the sovereign wealth-generating potential of these projects, that rely on the large oil companies experience and operational nous to commit to the dual objectives of shareholder returns and economic prosperity of the host country.  Complete eradication of corruption at senior levels of government must also be held as a primary objective if Mozambique’s long-suffering people are to benefit from their valuable resource bounty.   The country faces big challenges in the next few years, but nothing is impossible.