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Exxon will likely make the final investment decision for its Mozambique LNG project next year, Reuters reports, citing the country’s National Petroleum Institute.
The supermajor postponed the FID on the Rovuma project in March as part of wider measures to combat the effects of the oil price crash. Now, oil prices are on the road to recovery, but there is more pain ahead for LNG, with spot prices down to an all-time low of $1.85 per mmBtu. This, according to Reuters’ Clyde Russell, has turned LNG into the worst-performing commodity this year.
Rovuma LNG is a deepwater project that will tap reserves amounting to more than 85 trillion cu ft of natural gas, according to Exxon. The company was originally planning to greenlight it in the first half of this year but the oil price war between Russia and Saudi Arabia combined with the coronavirus pandemic threw a wrench in Exxon’s works. The oil crisis was accompanied by a similar development in LNG as well, with oversupply pushing prices to historic lows and demand slackening off.
In early 2019, Exxon said it had secured long-term purchasing commitments from Rovuma, which will have a planned capacity of 15.2 million tons of liquefied natural gas annually. Production was scheduled to begin in 2024. But with the oil crisis and the pandemic come problems that proved overwhelming. The delay will cost Exxon lagging behind the other energy company eager to develop Mozambique’s natural gas wealth, French Total. Total made the FID on its project in 2019.
Exxon has extensive participation in LNG projects around the world, including in Qatar, the world’s biggest producer and exporter of the commodity that is seen as the bridge fuel between the fossil fuel and the renewable energy eras. Exxon also has a stake in Chevron’s Gorgon project in Australia, one of the largest globally, and is the operator of the PNG LNG facility in Papua New Guinea.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.