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Mozambique LNG project timeline and all you need to know

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.

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Project timeline

2011-2014

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.

2017

The concessions to design, build and operate the marine facilities for the project were secured from the Government of Mozambique in July 2017.

2018

The Government of Mozambique gave the final approval for the Area 1 Mozambique LNG development plan in March 2018.

2019

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.

2020

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).

2021

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.

For this project, MITSUI and Japan Oil, Gas and Metals National Corporation (JOGMEC), jointly with Total S.A. of France, Empresa Nacional de Hidrocarbonetos E.P. of Mozambique, and others, will develop the Golfinho/Atum gas field in the northernmost part of Mozambique; transport feed gas through a subsea gas pipeline to the onshore liquefaction plant to be constructed; and produce and sell liquefied natural gas (LNG) with an annual production capacity of 13.12 million tons. In July 2020, JBIC signed a loan agreement in project financing with MOZ LNG1 FINANCING COMPANY LTD, the project company for this project.

The loan is intended to finance the development of the gas field and production of LNG in the project through MITSUI. Japanese utility companies are expected to offtake approximately 30% of the LNG produced by this project. JBIC’s support for this project is therefore expected to contribute to securing stable supplies of LNG, which is an important energy resource for Japan. JBIC will continue to actively support the development of energy resources by Japanese companies and financially assist in the securing of a steady energy supply for Japan.

In mid-Mach, CCS JV, comprising Saipem, McDermott and Chiyoda, signed a deal with ABB to provide comprehensive integrated and intelligent electrical systems for the Mozambique LNG project which was expected to start production by 2024. With LNG capacity of approximately 13 million tonnes per annum, the current development will spearhead crucial economic and social investment for Mozambique.

ABB’s 26-month project will culminate in a significant installed base in Mozambique for ABB and will involve collaboration across multiple ABB divisions and regions, led by ABB in Singapore. Fourteen large onshore electrical houses (e-houses) or prefabricated electrical substation buildings (PESB) – specifically designed for oil and gas applications, will be built by ABB team in Singapore and transported to the Mozambique LNG Project site.

The company would also integrate its electrical control and power management system alongside 110kV gas-insulated switchgears (GIS), medium voltage switchgears (33kV, 11kV) and low voltage switchgears.

In late March, the government of Mozambique and Total announced that construction works on the Mozambique LNG project, on the Afungi Peninsula, in the northern province of Cabo Delgado will soon resume after additional security measure were put in place in the area.

According to a press release from the Ministry of Mineral Resources and Energy, the government declared the area of the Mozambique LNG Project as a special security zone. “A road map has been drawn up with measures and actions seeking to restore and strengthen security. These measures include increasing the size of the contingent of the Mozambican defence and security forces stationed at Afungi. They will allow the gradual return of the workers who had been evacuated, and the resumption of construction activities,” read the statement.

A few days later, Total postponed the restart of works at the Mozambique LNG project and was scrambling to evacuate staff from the area, after deadly attacks on a nearby coastal town of Palma. Attacks on the town, which serves as the hub for the project, began on the day that Total announced it would gradually restart work, citing government efforts to improve security in the area.

In early April, Mozambique Army spokesman Chongo Vidigal said that the LNG project is beyond the reach of Islamic state-aligned insurgents. “It is protected. At no time was its integrity at stake,” he affirmed.

It was also reported that an estimated 10,000 people fleeing the attacks in northern Mozambique have sought refuge in a village within the concession area of the project, with more still arriving. According to a statement from the United Nations Office for the Coordination of Humanitarian Affairs, several thousands of people had sought refuge near the gas project, located about 8km south of the town that first came under attack on March 24. “The site is viewed as safe as there are hundreds of government troops stationed within the liquefied natural gas project to protect it,” read the statement.

In late April, Total withdrew all personnel from the Afungi site due to the evolution of the security situation in the north of the Cabo Delgado province in Mozambique; and declared Force Majeure on the Mozambique LNG project.

Total further expressed its solidarity with the government and people of Mozambique and wished that the actions carried out by the government of Mozambique and its regional and international partners will enable the restoration of security and stability in Cabo Delgado province in a sustained manner.

Around the same period, Italian engineering giant Saipem said it was working closely with Total to “preserve” the value of Mozambique LNG after it declared force majeure on the project because of the deterioration in the security situation in the country.
In mid-May, the Confederation of Economic Associations of Mozambique (CTA) announced that Total has suspended contracts with at least two companies building infrastructure for the project. The companies include an Italian construction firm contracted to build a resettlement village and a Portuguese public works company tasked with building a new airport.
“The impact of the (jihadist) attacks negatively affected 410 companies and 56,000 employees. Small and medium-sized local enterprises have already lost US $90m,” CTA president Agostinho Vuma said.

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Dennis Ayemba
Country/ Features Editor, Kenya

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