Breaking News!!! Eni, Anadarko agree unitisation of straddling Mozambique gas

mambapropseridadelng-anadarko_eni_mozambique

(2015-06-05) Anadarko and Eni have come to an agreement on how to unitise the giant gas reserves that straddle Offshore Area 1 and Offshore Area 4 in Mozambique’s Rovuma Basin, two Maputo-based sources told Interfax.

Under Mozambique’s decree law, Anadarko, the operator of Offshore Area 1, and Eni, the operator of Offshore Area 4, had a six-month deadline – which ended on 2 June – to come up with an unitisation agreement for the Mamba-Prosperidade complex, estimated to hold more than 850 billion cubic metres of reserves.

If they had failed to enter an arrangement on their own, the government would have appointed an independent expert to advise on areas of disagreement to ensure a deal was reached by December 2015.

However, Eni and Anadarko submitted a letter to the government this week confirming both companies had found a way to unitise the field but would need a few weeks to finalise the deal, two Maputo-based sources working closely on the project told Interfax on Thursday.

Mozambique’s government has been pushing for a unitisation agreement, hoping it will encourage the operators to develop the vast Mamba-Prosperidade field soon. However, both partners have first focused on projects to liquefy gas from their non-straddling assets.

Anadarko

Interfax understands Anadarko is planning to submit the development plan for an onshore LNG plant for its Golfinho-Atum field by the end of July. The United States-based independent awarded the EPC contract to a joint venture between CB&I, Chiyoda Corp. and Saipem for the first 12 mtpa phase of its LNG project in May.

Anadarko is moving forward with early works at the Afungi LNG park on the northern tip of Mozambique. The company has moved workers from the camp in the nearby town of Palma into the 300-person camp at the Afungi site. Anadarko’s pioneer camp at the LNG park will eventually be expanded to house 15,000-20,000 people at the height of work on the plant.

Eni

Meanwhile Italy’s Eni has received commercial bids for the construction of its 2.5 mtpa FLNG facility, which will be based on the non-straddling Coral field. The Italian oil major is expected to take an FID on the project in Q3.

Eni is also planning a 10 mtpa onshore plant based on the straddling Mamba field. Commercial bids for its construction are expected in July, and the company should submit a final onshore LNG development plan to the government in October.

Domestic allocation

Interfax understands Maputo is working towards having the host government agreement – which should provide the tax and legal framework for the liquefaction operations – in place before the end of 2015.

The government is finalising negotiations with Eni and Anadarko on how much gas from their developments should be dedicated to the domestic market.

Mozambique’s petroleum law, passed in August last year, stipulates 25% of all gas reserves should be earmarked for local consumption. However, as the original exploration and production concession contract signed by Eni and Anadarko does not put any domestic market obligation on the players, this volume has been negotiated downwards.

Eni’s FLNG project has been criticised because it will not provide any volumes for local consumption. However, it does promise LNG revenues for the government sooner. The FLNG project is expected online in 2019, whereas cargoes from Anadarko’s onshore LNG are not expected until 2020 at the earliest, or more likely 2021.

Eni holds a 50% stake in Offshore Area 4 and is negotiating with several buyers, including Chinese utility Huadian, to sell a 15% share in the block. Other shareholders in Area 4 are China National Petroleum Corp. (20%), Mozambique state oil company ENH (10%), Korea’s Kogas (10%) and Portugal’s Galp Energia (10%).

Anadarko operates Offshore Area 1 with a 26.5% stake. Other shareholders are Japan’s Mitsui (20%), ENH (15%), India’s ONGC Videsh (16%), Bharat PetroResources (10%) and Oil India Ltd (4%), and Thailand’s PTTEP (8.5%).

Source: Interfax Energy

Photo: The Mamba-Prosperidade complex is estimated to hold more than 850 bcm of gas reserves

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