LNG projects between 2017 and 2022: Projected FID is around 35 billion US dollars

These projections were made by Paul Eardley-Taylor, Oil and Gas Director for Sub-Saharan Africa’s Standard Bank, on the sidelines of the 5th edition of the Conference and Exhibition of Mines, Energy, Petroleum and Natural Gas of Mozambique (MMEC), held in Maputo, between 27 and 28 April.

According to Paul Eardley-Taylor,the offshore discoveries of materials in areas 1 and 4 of the Rovuma Basin have the potential to put Mozambique in the top 9 in the world ranking of natural gas reserves and in the top 5 for non-associated gas target investments that.

 However, the source warned, it is important to understand how the LNG projects are structured from conception until they have development.

 “We have the exploration phase and further a development phase, characterized by having a fairly low cost, where the company spends money on consultants and engineers in the early work of the contracting phase”, he said, noting that most of the expenditure only occurs after the FID (Final Investment Decision) is taken.

If ENI and Anadarko, operating in the Rovuma Basin, take a stand in this and next year, respectively, then there will be major capital expenditure between 2017 and 2022.

“This is how the projects work, and the FID is a determining factor for the vast majority of expenditure to be committed”, he stressed.

In his turn, André du Plessis, Executive Director of Corporate and Investment Banking for Standard Bank Mozambique, said he believed that Mozambique will be a potential provider to the global industry: “What we have to consider is the demand for LNG in the world, where there is a supply projection of approximately 450 million tons from 2019 (2015 LNG trade was 245 million tons). The increased supply should give confidence for new sources of demand to emerge”, he said.

The understanding that we have is that for LNG projects, the costs, including the production costs are always very important success factor. Although LNG in Mozambique should not be as cheap as projects of LNG from the USA because of its unique advantages, it is expected that it will have a number of competitive advantages.

Regarding the participation of the Government in LNG projects, André du Plessis explained that any government alone cannot do much about the outlook for supply and demand, as this is out of your control.

“But there are two important things they can do, the first is the legislation, licenses, regulation, all that is subject to a law or a process in Mozambique should be done as soon as possible so that there are no obstacles. But it is also important to give confidence to interested in LNG, which arises from the project in good time”, he said.