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John Daly

John Daly

Dr. John C.K. Daly is the chief analyst for Oilprice.com, Dr. Daly received his Ph.D. in 1986 from the School of Slavonic and East European…

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Is Mozambique the Next African Energy Superpower?

Portugal’s African colonies were starved of investment for centuries, but now Mozambique seems to be a rising African energy producer.

Both Italian and U.S. companies recently announced the discovery of massive natural gas fields off Mozambique, which could dramatically alter the Mozambiquean economy.

U.S.-based energy giant Anadarko Petroleum announced earlier this week that its natural gas reserves in its Mozambican reserve bloc fields could be three times larger than earlier estimated, comprising up to 30 trillion cubic feet of recoverable natural gas.

Italian oil and gas company Eni SpA two weeks ago also announced that it has discovered large amounts of gas off Mozambique and stated that it plans to invest $50 billion to develop the resources.

Eni SpA’s estimated reserves?

A mere 22.5 trillion cubic feet.

Houston-based Anadarko Petroleum stated that its Barquentine-3 appraisal well "encountered more than 662 net feet of natural gas pay, expanding the estimated recoverable resource range from 15 to more than 30 trillion cubic feet."

After announcing that Anadarko Petroleum announced that its estimated recoverable resources had effectively doubled. Anadarko Petroleum Chairman and CEO Jim Hackett said that this could be one of the most important natural gas fields discovered in the last decade worldwide, commenting, "In parallel, we've continued to advance an expandable LNG (liquefied natural gas) development that will support this world-class field. This is great news for Mozambique, as our ongoing activities will continue to spur meaningful investment in the region, generate significant revenue for the government and offer a multitude of opportunities for the people of Mozambique. The positive results of each appraisal well we have drilled and analyzed have continued to increase our estimate of recoverable resources and natural gas in place on our block, and add to our confidence that this could be one of the most important natural gas fields discovered in the last 10 years."

Anadarko Petroleum is currently the operator of one of Mozambique’s major offshore Indian Ocean exclusive economic zone (EEZ) offshore concessions area and has a 36.5 percent interest in the joint venture project.  Other investors include Mitsui Exploration and Production Mozambique Area 1 Ltd. with a 20 percent share, BPRL Ventures Mozambique B.V. with a 10 percent stake and Videocon Mozambique Rovuma 1 Ltd with 10 percent, while Cove Energy Mozambique Rovuma Offshore Ltd  retains 8.5 percent and India’s Bharat Petroleum has 10 percent as well, with Mozambique's national oil company Empresa Nacional de Hidrocarbonetos E.P. de Mocambique 's retaining a share as well through the initial exploration phase.

Should the projects be developed, Mozambique is able to transship its output to two of the world's top liquefied natural gas markets, Japan and South Korea, along with being in a prime position to service other rapidly emerging Asian gas markets, such as China and India.

The future?

Anadarko Petroleum is considering building a complete liquefied natural gas (LNG) facility to facilitate shipments of future production to East Asia, but is considering all options, with its  final investment decision for a LNG train to process Mozambique’s offshore natural gas production  expected in 2013, when, if all goes well, initial production will begin five years later in 2018.

As for Eni SpA’s production?

Eni SpA Chief Executive Paolo Scaroni said in an interview last month after visiting East Africa, “We aim to have several liquefiers working for Southeast Asia. The gas is targeted for Asia,” adding that Eni SpA was looking at constructing 2-3 liquefiers in Mozambique and that the first production of LNG gas could occur in 2016.

Not relying exclusively on the words of his new best international energy buddies, Mozambiquean President Armando Guebuza is sending advisors to Nigeria and Angola to survey their oil and natural gas operations.

But with a major U.S. and Italian firm ready to move forward, there seems little doubt that Mozambique’s natural gas reserves will be fast tracked to production, with the only questions being when and how.

By. John C.K. Daly of Oilprice.com


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