Rovuma LNG FID pushed back 

The Rovuma LNG project has taken another step ahead but a final investment decision (FID) is now expected in early 2020.

In a ceremony in Maputo today a consortium led by JGC Corp. was announced to have won the construction contract for Rovuma LNG. Other members of the consortium include TechnipFMC and Fluor. A report in Japan’s Nikkei said the total contract was worth $9.2 billion, with JGC’s share at $3.73bn.

The ExxonMobil-led plan will involve the construction of two trains, each with capacity of 7.6 million tonnes per year of LNG. First LNG should come in 2025, a year after the now Total-led Mozambique LNG facility. Rovuma LNG will take production from the Mamba field, in Area 4.

Ahead of the Maputo ceremony, there had been speculation that the FID for the project would be announced, which Exxon took care to downplay.

The award comes ahead of elections in Mozambique, due to be held on October 15. Mozambique President Filipe Nyusi is widely expected to be re-elected, although the ruling Frelimo party is expected to lose some ground on the parliamentary front.

Area 4 is operated by Mozambique Rovuma Venture with a 70% stake. This company covers Eni, ExxonMobil and China National Petroleum Corp. (CNPC). The remainder of the equity is held by Galp Energia Rovuma, KOGAS Mozambique and locally state-owned Empresa Nacional de Hidrocarbonetos (ENH). Exxon is leading the construction of the liquefaction facilities, while Eni is overseeing the upstream operations.

A second supplementary agreement was announced on the Rovuma LNG project in May. This set out the legal and contractual framework for the facility. This followed the development plan and unification agreements.

The partners in the project opted not to sign up sale and purchase agreements (SPAs). Rather, they will take on the production volumes and sales themselves. This allowed the project to move ahead faster than Mozambique LNG, which has signed SPAs for more than 90% of its production, but also increases the risk for the partners.

Standard Bank has previously estimated the project will carry a cost of around $30 billion, making it the largest ever to be planned in Africa. In addition to the fiscal contribution to the government – which the bank has projected at $4-5bn – the facility will also play a role in supplying gas for local consumption.

Anadarko Petroleum announced FID on the 12.88mn tpy Mozambique LNG in mid-June, which is based on the Golfinho and Atum fields on Area 1. At the end of September, Anadarko’s stake was transferred to Total. Eni approved the Coral South floating LNG (FLNG) plan in 2016, in Area 4. This will produce 3.3mn tpy of LNG and is due to start producing in 2022.

Once these three plants are producing, Mozambique will have 31.38mn tpy of capacity. There is scope for further expansion with some resources straddling the boundary of Areas 1 and 4. Standard Bank has said it expects another four onshore trains to be operational by 2029-30.

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