Galp says no room for misunderstandings in kick off of Mozambique’s natural gas projects

Paulo Mendonça_E&P Country Manager Mozambique_galp

(2015-12-04) Portuguese oil company Galp warns that mistakes in the initial phases of investment in natural gas in Mozambique could compromise the project “for generations to come”.

Meanwhile, a final decision for the planned floating platform of the Rovuma basin ‘offshore’ is expected within the coming months.

“There is much work to be done. Many steps are being taken and it is very important not to make mistakes in this initial stage, because we are about to commit on a project for 30, 40, 50 years,” the president of Executive Committee of Galp, Carlos Gomes da Silva, told Lusa on a visit to Maputo to attend the first Mozambique Social and Economic Forum (Mozefo).

Galp, a natural gas research and exploitation company, has a 10 percent stake in block 4 in a consortium led by Italy’s ENI, and is expecting a final investment decision on the Rovuma basin offshore platforms in the coming months, although the land-based projects will take longer.

“What we are doing, within the current context of low oil prices and more restrained expectations, is creating conditions to ensure both the onshore and the offshore projects are sustainable and profitable,” he said.

Da Silva noted that the investment involves assumptions like placing the gas in the market through long-term contracts and more than twenty years of engineering project financing.

“These are projects that require large financial resources and a sophisticated contractual complexity and when these premises are met within profitability assumptions, then we will take the investment decision,” he said, noting that this investment involves securing that the gas has a market through long-term contracts, guaranteeing the engineering projects and the funding for the entire operation.

Gomes da Silva insisted that this type of industry is very “time consuming” and that the fact that the schedule may not meet the initial expectation of the Mozambican government, which hoped to see operations start before the end of the decade, does not mean that companies are not working.

“On the contrary,the level of resources and sophistication of means we have all allocated to the project is huge,” he said, noting that everybody is eager but that “we need to realize that we have to do well”.

About the onshore project, the Galp CEO said that the two consortia continue to work together in the creation of facilities and infrastructure on the ground.

Gomes da Silva described the natural gas project in Mozambique as “one of Galp’s two major assets,” the other being Brazil, where its project is currently “in accelerated development to get into the maturity of its production in eight to ten years”.

The Mozambique project is in a phase similar to that of the Brazil project eight to ten years ago, according to Gomes da silva, who considers “natural and fair” Mozambicans’ expectation that the start of natural gas exploration will represent an acceleration of their economy, already one of the fastest growing in Southern Africa, and a strong source of revenue for the state.

“What is not properly calibrated in the average citizen is the temporal expectation, and we must speak clearly and be realistic and explain the various milestones that the project must inevitably follow,” he argued, again mentioning the complexity of the project, which involves for the first time the use of a floating platform in natural gas exploration and that “Mozambique will have a new cutting edge technology”.

Source: Lusa

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