Mozambique approves plan for Afungi Industrial Zone to produce liquefied natural gas

Yesterday, the Mozambican government approved the development plan of the consortium led by Anadarko to transform the Afungi peninsula in Palma into an industrial zone for the export of natural gas. “The objective is to allow the development of natural gas liquefaction activity, in order to make the exploration of Area 1 of the Rovuma Basin economically feasible,” Council of Ministers spokeswoman Ana Comana said. The main expected gains “include the marketing of resources with an estimated revenue flow of US$30.7 billion from taxes and gas profits sharing by 2047,” she added.

The development of infrastructure, the creation of 1500 jobs in the drilling, construction and operation phases are also highlighted as the main gains for Mozambique of the Area 1 project, whose costs are estimated at US$12 billion.

The consortium will explore the natural gas discovered deep in the earth’s crust under the seabed, 16 kilometres offshore from Cabo Delgado province.

Once drilled, the gas will be piped to the industrial zone to be built on the Afungi peninsula, where it will be converted into liquid and piped to special container ships for export.

The plan provides for two land-based liquefaction lines an annual liquid natural gas (LNG) production capacity of 12 million tonnes per year.

The final investment decision by the consortium is now awaited. The consortium has announced in recent months that it is closing pre-priced sales contracts for the gas it is going to produce in Mozambique.

The resettlement of the population living on the Afungi peninsula meanwhile began in November.

The consortium that operates Area 1 consists of North American Anadarko (26.5%), Japanese Mitsui (20%), Indian ONGC (16%), Mozambican state oil company ENH (15%), and smaller shares from two other Indian companies, Oil India Limited (4%) and Bharat Petro Resources (10%), and Thai PTTEP (8.5%).

Another oil company consortium will explore Area 4, further south in the Rovuma Basin, and announced its final investment decision in June, kicking off the five-year countdown to the start of production forecast at 3.3 million tons per year.

Source: Lusa