More on first agreement reached for purchase of Area 1 LNG – Mozambique

8:14 CAT | 28 Sep 2017

The Thai state owned hydrocarbon company PTT has announced that it is to purchase 2.6 million tonnes per year of liquefied natural gas (LNG) from northern Mozambique.

PTT has an 8.5 per cent share in the consortium holding the licence to exploit gas in Area One in the Rovuma Basin, off the coast of the northern province of Cabo Delgado. Area One is estimated to contain more than 75 trillion cubic feet of natural gas.

Also Read: Thai PTT concludes Mozambique LNG deal: 2.6 million tonnes a year

The newspaper “Bangkok Post” quotes PTT board chairperson Piyasvasti Amranand as stating that the company approved the LNG purchase on 22 September. He added that the partners in Area One are due to make their Final Investment Decision by the end of this year with gas production scheduled to begin in 2022 – 23.

This is a positive sign for Mozambique, as there have been continued delays in commercialising the huge gas reserves in the Rovuma Basin. In April, the Reuters news agency reported that the Japanese company Mitsui, which holds a 20 per cent stake in Area One, did not expect to take its final investment decision until between April and June 2018.

According to Piyasvasti, PTT’s gas sales agreement (GSA) is due to be signed next year at a price slightly below the 10 – 12 US dollars per million British thermal units found in PTT’s existing GSAs with Qatar Gas, Shell, BP and Petronas.

The operator in Area One is the Texas-based company Anadarko, which holds a 26.5 per cent stake. Along with Mitsui’s 20 per cent, ONGC Videsh holds 16 per cent, Oil India four per cent, BPRL Ventures ten per cent and PTT 8.5 per cent. In addition, Mozambique’s National Hydrocarbon Company, ENH, holds a 15 per cent stake.

Anadarko is developing Mozambique’s first onshore LNG plant consisting of two initial LNG factories (known as trains) with a total capacity of 12 million tonnes per year to commercialise gas from the Golfinho/Atum fields.

Building the two trains will take around four years, and so the start of LNG production will not be before 2022.

It is likely that the second Rovuma Basin consortium, located in Area Four and led by the Italian energy company ENI, will start LNG production before the Anadarko consortium. ENI and its partners in June signed the Final Investment Decision for a floating liquefied natural gas (FLNG) unit and the first LNG from this unit is expected to be produced by June 2022.

ENI has signed a contract to sell its LNG from the Coral South field to BP-Poseidon, a subsidiary of British Petroleum. This contract covers the sale of all LNG from Coral South for 20 years.

Source: AIM