Eni targets Mozambique FLNG for growth platform

20 February 2014 11:39 Source:ICIS
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Milan-based energy supplier Eni has revealed plans for three floating liquefaction (FLNG) projects in Mozambique where it holds more than 85 trillion cubic feet (tcf) – 2.4 trillion cubic metres – of gas, the company said in its strategy presentation on 14 February.

Following the unitisation of resources that straddle the Eni-operated offshore Area 4 and the adjacent Anadarko-operated Area 1, Eni announced plans to monetise a portion of its straddled fields with two 2.5mtpa FLNG units with a third planned elsewhere in Area 4.

Eni maintained it is still committed to host a shared onshore liquefaction facility with Anadarko Petroleum although indicated the first sanctioned phase may be smaller than previously expected.

The onshore Afungi export plant plans to cater for a phased development of up to 10 trains with the first phase initially conceived as a four-train 20mtpa facility shared equally by the Anadarko Petroleum-led and Eni-led consortia. However, that first phase for which the partners aim to take a final investment decision (FID) by the end of this year could go ahead with as few as two trains, according to a source close to the project.

While the onshore project developers are currently gearing up for a sanctioned first phase comprising of three 5mtpa trains of which two would be operated by Houston-based Anadarko and one to Eni, it could go ahead with each partner having one train each, the source clarified.

In Anadarko’s results briefing at the start of the month, company executives emphasised their focus has been on getting a 10mtpa project ready for FID by year end. Together with Japanese trader and Area 1 consortium member, Mitsui, Anadarko has been actively marketing initial production volumes of 10mtpa from two proposed trains. While Anadarko has sealed heads of agreements for two-thirds of its first train, Mitsui is also targeting 5mtpa of long-term sales to Japanese buyers. Mitsui, which holds a 20% equity stake in Area 1, has said in its own latest results call that it will not take ownership of any Mozambican offtake.

Meanwhile, Eni has been marketing its Area 4 volumes – albeit to different Asian customers. While there would be prospective buyers within Anadarko’s Area 1 consortium from India and Thailand as well as Japan, Eni is understood to have advanced discussions with China’s CNPC and South Korea’s KOGAS, which together own a combined 30% equity in Eni’s upstream resource.

In response to Anadarko’s offer of hybrid pricing, which includes linkage to the US Henry Hub, Eni’s senior vice president Marco Alvera told a media briefing, “Oil indexation is a big part of our [contract] discussions right now and we don’t see any interference with other players in the area in our commercial efforts at the moment.”

Eni reiterated that it would be prepared to divest its equity share in Mozambique from 50% currently to around 35%. The company declined to put a timeline on when it expected production from its proposed FLNG units, but said it is targeting to export its first cargo from the country in 2019. Meanwhile, Anadarko has maintained it can still export first LNG by late 2018.

By Ludovic Aldersley