Mozambique leads gas boom

Mozambique leads gas boom

Posted DEZ 20 2013 by BLOGGER in ANGOLA, ENERGY, MOZAMBIQUE with Comentários Desligados

Angola has become the third country in sub-Saharan Africa to export liquefied natural gas (LNG), following in the footsteps of Nigeria and Equatorial Guinea. Liquefied gas has already been exported from the Angola LNG plant to China, Japan and Brazil.

Feedstock is to be supplied to the facility from a large number of Angolan blocks and supplies have been received from BP’s Block 18, ExxonMobil’s Block 15 and Total’s Block 17. Angola LNG is owned by Chevron, with a 36.4% stake, state-owned Sonangol (22.8%), BP (13.6%), Eni (13.6%) and Total (13.6%).

However, the facility has been affected by a series of leaks and fires that have hit production. In addition, one person was killed when the drilling rig Perro Negro 6 capsized while laying a pipeline from Chevron fields to the LNG plant. The plant was closed down on 29th September for an expected 53 days of maintenance after just a handful of shipments had been produced. Production will now take longer than expected to be ramped up to full capacity, even when the maintenance work is completed. Sub-Saharan Africa is expected to become a more important source of LNG supply over the next decade, as Mozambique and possibly Tanzania join the ranks of the producers. LNG is produced when natural gas is cooled sufficiently to turn it into a liquid that can be transferred on to ships for export around the world. Both liquefaction plants and the regasification plants needed in the importing country cost billions of dollars to construct and so projects are only developed when there is sufficient ring-fenced gas to supply schemes for a minimum of 20 years.

Mozambique will be particularly well placed to supply China and other Asian customers when its LNG project is completed. Consortia led by US firm Anadarko and Eni of Italy will supply gas to a single LNG project in the far north of Mozambique. The final contract on the scheme is expected to be signed by July next year, which the government hopes will be soon enough to enable gas exports from 2018.

Four LNG trains, or production lines, are planned in the first instance, with up to 10 in the longer term, which would provide total annual production capacity of 50m tonnes, making Mozambique one of the world’s biggest LNG producers.There seems little doubt that the venture will proceed, as Anadarko has announced that it is already in talks with 20 different customers and expects to announce sales agreements late this year and in early 2014.

Recent exploration wells have uncovered more gas, including an estimated 5-7 trillion cu ft on Eni’s Agulha Field, on top of the Italian firm’s previous estimate of 80 trillion cu ft on its acreage. Eni chief executive Paolo Scaroni said of Agulha: “It is a completely new play. While it’s not that exciting to find more gas in Mozambique, because so much has been discovered already, it really is exciting to find a new play, in which we can see the potential for wet gas. This might lead to more gas, more condensate and more oil.” Danger of oversupply? Some analysts fear that the global market for LNG could be oversupplied by a combination of a string of new projects in Australia, weak demand in the EU and the shale gas boom in North America. However, China and India are both expected to greatly increase their LNG imports in the near future, while renewed demand is forecast in Japan and South Korea as Tokyo and Seoul seek to reduce their reliance on nuclear power in the wake of the Fukushima nuclear disaster.

The big impetus, however, could come from new air quality regulations in China. The Airborne Pollution Prevention and Control Action Plan 2013-17, which was published in September, requires the government to reduce the proportion of coal in its energy mix to less than 65% by 2017 and to steadily fall thereafter. In terms of its impact on Africa, it could affect the pace of development of the Mozambican coal industry because China now accounts for just over half of global coal demand.

However, it should also increase demand for African LNG. Some of China’s more modern coal-fired plants are to be converted to operate on gas feedstock, while the proportion of gas in the energy mix is expected to increase from 5% in 2011 to 7.5% as soon as 2015.

According to the 12th Five Year Plan on Energy Development 2011–15, the country’s LNG import capacity should exceed 50m tonnes a year by 2015 and could double within another decade, as Beijing seeks to create a diverse range of gas suppliers.

African Business