The Mozambique LNG project comprises the Golfinho-Atum gas field development in the offshore Area 1 Block of the deep-water Rovuma Basin and the construction of a 12.88 million tonnes per annum (Mtpa) onshore liquefied natural gas (LNG) facility on the Cabo Delgado coast of Mozambique. This will be the first onshore LNG facility in Mozambique.
Area 1 Mozambique LNG facility
The Golfinho and Atum gas fields are located in 1,600m-deep waters within the Rovuma Basin Area 1, approximately 40km off the coast of Cabo Delgado. The Offshore Area-1 is estimated to contain 75 trillion cubic feet (tcf) of recoverable natural gas resources.
The LNG processing and export facility will be developed in the Afungi peninsula in Cabo Delgado, the northernmost province of Mozambique.
The Area 1 Mozambique LNG facility will consist of two liquefaction trains with a combined nameplate capacity of 12.88Mtpa in the initial phase. It will also house gas pre-treatment facilities and full-containment LNG storage tanks. The LNG production capacity of the facility is proposed to be further expanded up to 50Mtpa in future.
The plant will receive feed gas supply from the Golfinho-Atum gas field through pipeline and produce LNG for export to the Asian and European markets, as well as for domestic consumption in Mozambique.
Other support facilities for the LNG plant will include materials offloading facility and an LNG marine terminal capable of accommodating large LNG carriers, which will also be shared with upcoming Area 4 LNG projects.
The environmental impact assessment (EIA) for the Area 1 Mozambique LNG project was carried out.
The Mozambican Ministry of Coordination of Environmental Affairs (MICOA) approved the EIA report in June 2014.
The concessions to design, build and operate the marine facilities for the project were secured from the Government of Mozambique in July 2017.
The Government of Mozambique gave the final approval for the Area 1 Mozambique LNG development plan in March 2018.
The final investment decision (FID) on the Mozambique LNG project, which is estimated to cost approximately US $20bn, was taken in June 2019. Construction works on the integrated LNG project were started in August 2019. The start of production is scheduled for 2024.
The African Development Bank (AfDB) concluded its bid to co-finance the construction of Mozambique’s integrated Liquefied Natural Gas (LNG) plant by signing a senior loan of US $400m for the project.
In August, the government of Mozambique signed a security pact with Total to support the development of the US $20bn Mozambique LNG project amid an insurgency linked to Islamic State.
According to the pact, a joint task force will ensure the security of Mozambique LNG project activities in the Afungi site, and across the broader area of project operations. Mozambique LNG will provide logistic support to the joint task force which will ensure human rights principles are respected.
In September, the US through the International Development Finance Corporation (DFC) agreed to provide up to US $1.5bn in political risk insurance to support the commercialization of natural gas reserves in Mozambique’s Rovuma basin; a region ravaged by an Islamist insurgency for the past three years.
The insurance is to cover the construction and operation of an onshore natural gas liquefaction plant and support facilities being developed by energy giants including American firm ExxonMobil, French’s Total and Italian’s Eni.
In mid-September, Total CEO Patrick Pouyanné and Mozambican president Filipe Nyusi met to discuss an intensifying Islamic State-linked insurgency in the country’s north, where the project is located. The violence is now creeping towards the project; recent videos that appear to show abuses, including torture and executions of civilians, by Mozambique’s army suggest the Cabo Delgado province has become increasingly lawless.
In October, Bharat Petroleum Corporation (BPCL) tied up a 15 year long term contract for 1 million tonne per annum (mtpa) LNG from its much awaited Mozambique project. BPCL owns 10% in the 12.88 mtpa project offshore the Mozambique basin where OVL and Oil India are the other consortium partners, while French energy giant Total is the operator.
In the same month, CCS JV, a joint venture between Saipem and McDermott selected Siemens Energy to supply emissions-reducing power generation equipment and boil-off gas compressors for. The equipment order comes just weeks after an agreement was signed between Total and Siemens Energy to advance new concepts for low-emissions LNG production. As part of the contract, Siemens Energy is conducting studies to explore a variety of possible liquefaction and power generation plant designs, with the goal of decarbonizing LNG facility development and operation.
In late October an executive from project operator Total confirmed that the project is on track to produce its first cargo in 2024 despite pandemic disruptions globally.
In late December, Daewoo Engineering & Construction (E&C) announced that it had signed a contract for the construction of Mozambique LNG Area 1 which involves building two liquefaction trains and auxiliary facilities with an annual production capacity of 64 million tons at the Afungi Industrial Complex in Mozambique. It will take 33 months to complete them.
Daewoo E&C will be tasked with the construction of key processes such as steel frames, machinery, piping, and electricity. The project is promoted by seven companies including global oil company Total of France and a state-run gas corporation of Mozambique. The main contractor of the project is CCS Joint Venture (JV).
In January, Total-led Mozambique LNG Project announced that it has temporarily reduced its workforce on site in response to the prevailing environment, including ongoing challenges associated with COVID-19 and the security situation in northern Cabo Delgado.
The northern province of Cabo Delgado, which has major gas resources, has been the scene of a bloody jihadist rebellion for more than three years. However in recent weeks there have been intensifying attacks near the gas site on the Afungi peninsula, several security.
In late January, the president of French oil company Total and the Mozambican president agreed to further strengthen security around the natural gas venture in Cabo Delgado. Rebel groups that have been terrorising Mozambique’s northern province for three years have increased attacks in 2020 and have approached the construction site led by Total, leading to a slowdown in the project and the departure of staff at the end of the year.
The armed violence in Cabo Delgado, northern Mozambique, is causing a humanitarian crisis with around 2,000 deaths and 560,000 displaced people, without housing or food, mainly in the provincial capital, Pemba.
In mid-February, the Mozambique Liquefied Natural Gas (LNG) Area 1 Project and the African Development Bank have jointly received the prestigious Global Multilateral Deal of the Year 2020 award by the print and online publication Project Finance International (PFI). The project, the single largest foreign direct investment in Africa to date with a value of more than US$24bn, will exploit Mozambique’s immense offshore natural gas reserves.
In late February, the Japan Bank for International Cooperation (JBIC) signed a loan agreement amounting to up to US $536m with MITSUI & CO., LTD for development of Mozambique LNG Project. The loan is co-financed with private financial institutions, bringing the total co-financing amount to US$ 894m equivalent.