Anadarko sanctions LNG project offshore Mozambique
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Anadarko sanctions Mozambique LNG project

By Umar Ali 19 Jun 2019 (Last Updated July 9th, 2020 15:13)

US hydrocarbon exploration company Anadarko has made a final investment decision (FID) on the Area 1 project offshore Mozambique.

Anadarko sanctions Mozambique LNG project
The Area 1 development will be Mozambique’s first onshore LNG development. Credit: Anadarko.

US hydrocarbon exploration company Anadarko has made a final investment decision (FID) on the Area 1 project offshore Mozambique.

The official declaration of the FID was made on Tuesday 18 June, at a sanctioning event in Maputo, Mozambique, which confirmed that the project is now able to advance to the construction phase.

The Area 1 Mozambique LNG project will be the country’s first onshore LNG development, initially consisting of two LNG trains with a total capacity of 12.88 million tonnes per annum (MTPA) to support the development of the Golfinho/Atum offshore fields in Area 1.

Anadarko is the operator of Offshore Area 1 through its subsidiary Anadarko Moçambique Área 1, with an operating interest of 26.5%. Partners in the project include Mitsui E&P Mozambique Area 1 (20%), ENH Rovuma Área Um (15%), ONGC Videsh (10%), Beas Rovuma Energy Mozambique (10%), BPRL Ventures Mozambique (10%) and PTTEP Mozambique Area 1 (8.5%).

President of Mozambique Filipe Nyusi said: “This is a historic day for the people of Mozambique.

“Today’s sanctioning of the Anadarko-led Area 1 Mozambique LNG project solidifies a path toward the creation of thousands of jobs for our people, significant economic growth for our nation, and the potential to be one of the world’s largest providers of cleaner energy for decades to come. It is truly one of the most important and transformational projects in our country’s history.”

Anadarko chair and CEO Al Walker said: “This is an exciting day for Mozambique and for our partnership, bringing us a step closer to making Mozambique’s first onshore LNG facility a reality.

“The Anadarko-led Area 1 Mozambique LNG project has come a long way from our first discovery to FID for the construction of the initial two-train development project. I want to say a collective ‘thank you’ to the world-class LNG team we have assembled at Anadarko, our co-venturers, long-term foundation customers, lenders, the people of the Cabo Delgado region, and the Government of Mozambique.

“As the world increasingly seeks cleaner forms of energy, the Anadarko-led Area 1 Mozambique LNG project is ideally located to meet growing demand, particularly in expanding Asian and European markets. We look forward to safely executing the next phase of this project for the long-term benefit of Mozambique, its people, our partnership, and our customers.”

In February 2019, Anadarko signed two Sale and Purchase Agreements (SPAs) for the long-term supply of LNG to Tokyo Gas, Centrica and Shell. Centrica and Tokyo Gas agreed to buy 2.6     MTPA of LNG from the start-up of production from Mozambique Area 1 until the early 2040s, while Shell agreed to buy 2     MTPA of LNG from Area 1 for a term of 13 years.

Anadarko also signed an SPA with Japanese power company JERA and Taiwanese oil and gas company CPC in May 2019, agreeing to supply 1.6 MTPA of LNG from the Area 1 project, which JERA and CPC will jointly purchase over a period of 17 years.

The Area 1 developments are part of a number of investments expected to make Mozambique into one of the world’s top 10 LNG producers by the mid-2020s, with over 30 MTPA estimated to come on stream in the next few years.

Following the ceremony on Tuesday the Area 1 project expects to issue notices to proceed to a number of contractors, under the terms of previously executed engineering, construction, procurement and installation contracts.