Mozambique strives to get liquefied natural gas projects online
T
he slightly scruffy, nondescript building in downtown Maputo that serves as the headquarters of Empresa Nacional de Hidrocarbonetos — sandwiched between a KFC outlet and a café — could serve as a metaphor for the status of Mozambique’s state-owned oil company.
For much of its 35-year life, ENH was a dormant, little-known entity, and even today it struggles with limited resources. Yet in recent years, ENH has had many of the world’s top energy groups knocking on its doors because the waters off Mozambique’s east coast are home to some of the world’s largest untapped gas reserves.
ON THIS TOPIC
- Mozambique rivalry erupts into violence
- Analysis Mozambique hit by commodity price fall
- Big game, big money
- Mozambique banks on vast gas reserves
IN OIL & GAS
Sign up now
FirstFT is our new essential daily email briefing of the best stories from across the web
Since 2010, Anadarko Petroleum of the US and Italy’s Eni have made gas discoveries in the Rovuma Basin in the Indian Ocean that are estimated collectively to exceed 160tn cu ft. When developed, these gas reserves have the potential to transform one of the world’s poorest countries into a key global supplier of liquefied natural gas.
As the state energy company, ENH has a stake of at least 10 per cent in all Mozambique’s gas projects, and is the main vehicle through which foreign oil groups interact with the Maputo government.
The responsibility of steering ENH through the process of commercialising Mozambique’s gas discoveries falls to Omar Mitha, a former bank economist who became its chairman in August.
Unsurprisingly, he is bullish in an interview with the Financial Times about the potential the gas offers his country, describing it as “a transformational project and a unique opportunity for Mozambique to leapfrog its developmental stages”.
Yet Mr Mitha has moved into ENH’s top post at a tricky time — oil prices have collapsed since last year, and the price of LNG in the Asian markets that are being targeted by Mozambique is tied to the value of crude.
Against this backdrop, getting the Mozambique projects to development stage is taking longer than many expected.
Mr Mitha acknowledges with a mix of realism and urgency that ENH “is feeling the pressure” as an expectant nation waits for the riches beneath the Indian Ocean to be unlocked.
Mozambique prepares to harness vast gas reserves
What sounds like a grandiose mega-project in the deserts of the Arab Gulf is in fact the blueprint for a remote coastal area of Mozambique, one of Africa’s poorest countries
“What is critical is that we need to speed up the pace to the market because the window of opportunity might shrink,” says Mr Mitha. “The reason behind that is because the dynamics of the marketplace are changing.”
Amid the oil price crash, western oil companies are tightening their belts partly by slashing capital expenditure and delaying projects. Meanwhile, output by some existing LNG producing countries, particularly Australia, is expected to increase significantly over the remainder of this decade — with the US due to join this group of nations soon.
Anadarko and Eni were both expected to deliver their final investment decisions for their Mozambique projects this year.
Eni has said it is sticking to that timetable, and Anadarko told the FT the timing of its final investment decision would depend on the pace of the Maputo government’s approval of relevant permits.
Analysts now think both companies’ decisions will probably take place next year.
Mr Mitha says ENH wants to see the first shipment of LNG leaving Mozambique’s shores in 2020 — a target shared by Anadarko and Eni.
But four years ago, when Eni announced it had made the largest gas discovery in its history off the coast of Mozambique, the Italian group was predicting that initial production would be possible in 2016.
One of the key issues is the financing of the Mozambique projects, which are expected to be among the largest ever in sub-Saharan Africa.
FT series
The first phase of development by the consortium led by Anadarko — notably two LNG trains, as the plants that turn gas into liquid are known — is expected to cost at least $15bn.
The challenge for cash-strapped ENH — which generated 3.5bn meticais of revenue last year — is how it raises the estimated $1.5bn to $1.7bn to cover its share of the projects. It has a 15 per cent stake in the Anadarko consortium and a 10 per cent share of the Eni project.
The Maputo government, which last month agreed a $286m emergency loan from the International Monetary Fund, has severely constrained resources.
Mr Mitha says ENH is looking at the possibility of initially being “carried” by its partners in the projects, with the foreign groups financing the Mozambique company’s equity contributions.
This option is likely to be more costly for ENH than bank financing but could ease the process of getting the projects started. ENH would then look to traditional project financing from the banks once the developments are under way.
In spite of the challenges, he is confident that Mozambique’s gas will fulfil its potential. He was buoyed by the country’s latest licensing round, during which ExxonMobil of the US and Eni were among those awarded new blocks last month.
“It is a clear indication that even with our problems, we still offer advantages over other countries,” says Mr Mitha.
|
In an effort to avoid the curse that has afflicted many commodity producing countries in Africa — where governments failed to ensure that natural resources benefited local populations — ENH has ambitions to oversee the development of gas-fed industries.
The idea is that Mozambique’s gas should have a practical benefit for the impoverished nation by creating domestic businesses and jobs. Among other things, ENH is interested in nurturing the production of agricultural fertiliser.
Some 18,000 hectares of land has already been earmarked in the remote northern coastal area of Palma for a “gas city” that bears similarities to energy projects built in the deserts of the Arab Gulf.
However, there is concern that corruption could rear its head when contracts are awarded in Mozambique.
Last year, there was criticism by non-governmental organisations at what they regarded as a lack of transparency in the awarding of a key contract for a logistics base for the nascent gas industry in the northern port of Pemba. The contract was won by Enhils, a joint venture set up between ENH Logistics, a subsidiary of ENH, and Orlean Invest, a Nigeria-based company.
Mr Mitha says ENH is doing its “utmost” to provide transparency, and while careful not to mention names, adds he is “not happy” when contracts have been awarded without an open tender process.
|
No hay comentarios:
Publicar un comentario