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Moza Earns $34Million from Floating LNG in Six Months

The ENI operated Coral Sul Floating Liquefied Natural Gas (FLNG) has delivered $34Million into the Mozambican treasury as of mid-May 2023.

Coral Sul FLNG has a gas liquefaction capacity of 3.4Million tons per year; it produces LNG from the 16 Trillion cubic feet of gas (estimated recoverable reserves) in the ultradeepwater Coral reservoirs.

The project’s first LNG shipment departed for the market on November 13, 2022.

Carta de Moçambique reports that the earnings will not be used before the approval of the Sovereign Fund, for which a legislative bill is l working its way through Parliament. The purpose of the Sovereign Fund is to manage revenues from natural gas mega-projects. It will be under the purview of the Bank of Mozambique.

$7Billion was invested on the project by ENI and its Area 4 partners, including Mozambique Rovuma Venture (MRV) S.p.A. which is a Joint Venture co-owned by ENI, ExxonMobil and CNODC, with 70% participating interest, Outside of that, the state hydrocarbon company Empresa Nacional de Hidrocarbonetos E.P. (ENH), has 10%; Galp Energia Rovuma B.V. has 10% and KOGAS Mozambique Ltd. holds 10%.

How Natural Gas Market Integration Can Help Increase Energy Security

By Rachel Brasier, Andrea Pescatori, and Martin Stuermer-IMF

Natural gas might be the same commodity everywhere in the world, but prices can vary dramatically because of the complex network of infrastructure needed to transport it.

The result is a partially fragmented global market, mainly because most natural gas moves by pipeline—unlike the market for crude oil, which is more integrated and tends to trade at a single price in most places. Such fragmentation in the natural gas market means not only that prices differ across regions, but also that high prices in one part of the world don’t necessarily transmit to buyers in other places.

Russia’s invasion of Ukraine provided a stark illustration of the effects of segmentation. Pipeline flows to Europe from Russia dropped by 80 percent since mid-2021, sending the continent’s gas prices up 14-fold to a record level in August 2022.  Prices for globally traded liquefied natural gas saw a similar jump. But LNG prices in the United States merely tripled, remaining several times below Europe and Asia.

The disparity in prices, and the US insulation against global gas-market shocks, stems from the idiosyncrasies of gas extraction and transportation. Historically, the US market was linked to crude oil prices because gas was mostly a byproduct of oil drilling, but this relationship, sometimes called artificial integration, has been unwinding over the past decade, mainly because of rising shale gas production. And as gas production surged in the US, which surpassed Russia in 2012 as the world’s largest producer, and export terminals were built, it became easier to sell into markets beyond North America.

Another important factor for gas prices is the technology needed to liquefy and ship the fuel, which must be converted into a compact form—about 600 times smaller by volume than in its gas form—called liquefied natural gas before it can be loaded onto specially designed carriers for transport by sea or road.

LNG export capacity is fixed in the short-term. Facilities for the liquefaction, exporting, importing, and regasification require major investment, so a regional shock, such as Russia’s invasion of Ukraine, can send regional prices moving in different directions.

After the invasion last year, Europe turned to LNG to replace pipeline imports of Russian gas, and US shipments emerged as a key substitute. Why was that possible when US LNG export capacity is fixed? With gas in Europe commanding a temporary price premium during the spring and summer of 2022, Asian customers of US LNG decided to reroute their cargoes to sell in Europe.

There is another important quirk of the natural gas market at play. Pricing formulas for long-term delivery contracts with US companies usually use US prices. That meant Asian customers with long-term deals could buy more cheaply from the US, then reroute tanker ships at sea to sell cargo at the much higher European spot market price.

Despite an increasing reliance on LNG as a substitute for Russian pipeline gas, European LNG import capacity turned out not to be a binding constraint on market integration. European import terminals had plenty of spare capacity before Russia’s invasion of Ukraine, and with the addition of mobile floating storage regasification units, Europe has the necessary infrastructure to accommodate higher volumes of LNG imports.

On the other hand, the United States and other gas producers are exporting at the limits of their capacities, and expansions to global LNG export capacity are needed to bring European and Asian prices back to historically normal levels over the longer term. In the United States, these capacities are poised to keep growing, even after already rapid gains. The first LNG export terminal in the country opened in 2016, followed by many more.

Sizable expansion projects already under construction in the United States, Africa, the Middle East, and elsewhere are likely to increase global LNG export capacity by 14 percent by 2025. Other planned projects could bring export capacity to around 1Trillion cubic meters, roughly a quarter of last year’s global gas consumption.

Securing financing to build new terminals, however, can face major hurdles. Companies need 15- to 20-year contracts to obtain bank financing for construction. Terminals usually cost $10Billion to $15Billion and take two to four years to complete. Timelines are less certain for projects without long-term sales contracts, and some may never be built.

Ultimately, expanded LNG export capacity for the United States and other producers may prove crucial to creating truly global gas markets that are balanced across regions. As advanced economies increase reliance on weather-dependent renewable energy from wind and solar, they will likely see critical periods of increased demand for supplemental natural gas to meet power generation needs. Integrating global gas markets and building needed infrastructure allows prices to stimulate demand and supply reactions in larger, more integrated markets. This helps to buffer global energy markets against supply shocks

TOTAL Sets up a $200Milion Foundation for Community Development in Moza’s Gas Rich District

TOTALEnergies has received the report of the human rights advocate it commissioned to evaluate the conflict challenges and living conditions of the communities around its project in Mozambique’s gas rich Cabo Delgado Province.

The French major has elected, based on the report by Jean-Christophe Rufin, to set up a well-heeled foundation with a detailed, comprehensive work programme.

The 800-word press release focuses on improvements in community engagement and makes scant reference to the fatal attacks by Islamic insurgents which drove TOTAL and its contractors away from the LNG plant construction site in April 2021 and led to the commissioning of Mr. Rufin’s investigation.

TOTAL says that itself and its partners in the Mozambique LNG Ltd have approved the following action plan:

– Mozambique LNG shall establish a dedicated Foundation for the implementation a socio-economic development programme covering the whole territory of the Cabo Degaldo province, as part of a consistent and sustainable development strategy. The action of the Foundation will be guided by an objective of shared prosperity in the province, without waiting for the revenues expected during the production phase of the project. In order to sustain its action, this Foundation will be provided with a multi-annual budget of $200Million. The Foundation will be headed by a recognized figure in the field of local economic development and overseen by a Board of Directors including representatives of Mozambique LNG and of the civil society. Its actions will be conducted in a coordinated manner with the activities carried out by the other development stakeholders present in the Cabo Delgado province. This Foundation will act under the name of “Pamoja Tunaweza” (“together we can” in Kiswahili).

– Regarding the populations affected by the development of the Afungi industrial site, the following actions will be implemented:

  • The relocation and compensation process will be audited to identify the corrective actions to be implemented.
  • The resettlement of the Quitupo village residents will be finalized without delay. To that end, Mozambique LNG will complete the construction of the new Quitunda village houses by the end of the Summer 2023. All Quitunda houses shall be equipped with access to solar energy.
  • The inventories of the assets of the populations affected by the project and subject to compensation (constructions, land plots and plantations) will be updated, to ensure that compensations fully reflect the current situation of these assets.
  • The payment of compensations to families affected by the project will be accelerated. A taskforce shall be set up together with the Mozambican authorities to enable all families to obtain, by the end of the summer in 2023, the legal documents required to receive the payments due to them.
  • Access of local communities to agricultural areas will be facilitated and enlarged. Given that the Mozambique LNG industrial facilities do not occupy the entire land area granted by the Government of Mozambique, a surface of about 2,000 hectares located in periphery of the site will be made available to local communities for agricultural activities.
  • Individual transportation means will be provided to the fishermen resettled in Quitunda, to facilitate their access to the various fishing areas.

The report notes that the security situation in the north of Cabo Delgado has evolved positively in 2022 and recommends reviewing the framework of relations between Mozambique LNG and the Mozambican Defense Forces in light of this situation. Mozambique LNG has started a dialogue with the Mozambican authorities to this end.

Finally, a follow-up mission to monitor the implementation of this action plan will be carried out by Jean-Christophe Rufin at the request of Mozambique LNG project partners.

First E& P Plans an Offshore Gas Gathering Hub

FIRST E&P is developing an open-access offshore gas gathering and processing hub around its operated OML 83 and 85 assets. The company is hoping the facility could have the capacity to process 1Billion standard cubic feet per day, from a mix of FIRST E&P’s gas as well as other third-party gas within a 60- to 80-kilometre radius.

First E&P thinks this is an opportunity because there is, in Nigeria, an absence of open-access gas gathering, processing and transportation infrastructure in the offshore terrain.This offshore gas hub will process wet gas to pipeline specifications as well as enhance value from our gas resources with extraction of the condensate and NGLs. Robust gas transportation options in addition to pipelines, such as LNG and CNG, will also be incorporated into the development concept to efficiently serve both local and international markets. The offshore gas hub plant FEED has been launched and is expected to be completed in mid-2023 when the formal project FID is scheduled to be taken to assure first gas is on stream in 2026.

There is no certainty, though, that the FID could be taken this year.

Such a project would fill a vast infrastructure gap, which has obstructed monetization of offshore gas resources in the country.

Unlike crude oil, raw gas must be processed and conditioned to pipeline-specification gas flow, which entails separating the gas liquids, condensates and related heavy ends before moving it onshore or commercialising demand points efficiently.

Negotiations Concluded: HGA, PSA on Tanzanian LNG to Be Signed in a Few Weeks

Norway’s Equinor and UK based Shell Plc have concluded negotiations on key agreements on the Tanzanian LNG development with the Government.

“Subject to successful completion of the assurance process over the coming weeks”, says Jared Kuehl, Shell’s Vice President and Country Chair for Tanzania, “we anticipate signing a Host Government Agreement (HGA) that covers the onshore elements of the project, and a Production Sharing Agreement (PSA) that oversees its upstream component”.

Unni Fjaer, Managing Director of Equinor Tanzania, notes: “Negotiations on key agreements between the international energy companies (IECs) and the Tanzanian government are now concluded, and the documents are now subject to final reviews and approvals before their expected signing in the following weeks”.

Shell’s Kuehl describes the update as “a significant milestone, on the long path to realising such a major project like Tanzania LNG, with the next steps involving a period of time of detailed engineering design work”. He says that Equinor and Shell, “as joint operators, are pleased with the steps forward and remain focused on continuing to work together with our partners (ExxonMobil, MedcoEnergi and Pavilion Energy), TPDC and of course the Government of Tanzania.”

Equinor’s Fjaer thanks “the Tanzanian government, the negotiating team from Equinor, Shell, ExxonMobil, Medco, Pavilion and TPDC for their hard work throughout this process”. She adds that the end of negotiations “paves the way for the series of milestones that need to follow to realize this fantastic LNG opportunity for the country and the world.”

The deal will allow the two European E& P giants to start engineering work on a project that will pump over 1.5Billion cubic feet per day of gas in three deepwater blocks to a 10Million-15Million tonne per annum LNG plant on the Indian Ocean coast town of Lindi.


IMF Official Expects 30MMTPA of LNG to be online in Mozambique by 2029

Thibault Lemaire, an economist at the International Monetary Fund, has expressed the view that both the ExxonMobil led Rovuma Basin LNG project and the TOTALEnergies operated Mozambique LNG facility will be online by 2029.

Noe of these two companies have been definitive about dates of project delivery.

The 13Million Metric Tonnes Per Annum TOTAL operated project, which took Financial Investment Decision in 2019, is held up four years after the FID by the security issues in the surrounding areas outside the perimeters of the site, on the Afungi Peninsula in Cabo Delgado Province, in Mozambique’s far north.

The 15MMTPA ExxonMobil led facility has not reached financial close.

But Mr. Lemaire, a French national covering African projects, is a ranking executive at the IMF, so is expected to have searching insight.

He told the Portuguese news agency Lusa that he expects the consortiums led by TOTALEnergies and ExxonMobil to start gas production in Mozambique in 2027 and 2029, respectively.

“Two onshore liquefied natural gas exploration projects are expected to start production in 2027 and 2029, which will have a positive impact on growth via production, tax revenues and the current account,” LemaIre said, noting that TOTAL would return to Mozambique after work was suspended due to violence in the north of the country and that ExxonMobil would soon make a positive final investment decision for Mozambique.

The projects, to be both sited onshore with long, part subsea pipelines to the deepwater reserves below 2,00metre water depth in the Indian Ocean

Lemaire spoke with Lusa, following the release of the report on forecasts for sub-Saharan Africa, presented as part of the Spring Meetings of the IMF and World Bank.

The IMF expects Mozambique’s economic expansion to accelerate, after the 4.1% growth recorded in 2022, an increase from the 2.3% recorded in 2021, following the worst phase of the pandemic, and with recoveries in the hotel, transport and communications sectors. “For 2023, and in the medium term, we expect a new recovery, growth of 5% in 2023 will be driven by the extractive industries, including the first LNG facility: the 3.4MMTPA Coral South, a Floating LNG project, whose export commenced at the end of 2022.

Please Come Back, Mozambique Begs TOTAL Again

Filipe Nyusi’s keynote address at the Mozambique Mining & Energy Conference (MMEC), is the latest, clear indication that TOTALEnergies has not expressly determined it was going to move back to the site of construction of the 13Million Tonnes Per Year Liquefied Natural Gas project in the country.

The Mozambican President’s speech on Wednesday April 26, 2023, sought to convince the French Major and the international audience at the meet that it was safe for the company to restart its Cabo Delgado liquefied natural gas (LNG) project that was halted in 2021 following wide scale insurgent attacks on civilians.

“The working environment and security in northern Mozambique makes it possible for TOTAL to resume its activities any time,” Nyusi declared, referring to the 18 month old offensive by Mozambique and its partners, Rwanda and other Southern African countries, against the Islamic State backed insurgents, whose killing spree in the towns and villages close to the LNG site surged to a historic high in 2021, forcing TOTAL to declare a force majeure on the $20Billion project.

TOTALEnergies’ Chairman and Chief Executive Patrick Pouyanne visited Mozmbique in February 2023 to meet President Nyusi and review the security and humanitarian situation in Cabo Delgado, the northern province of Mozambique where the project is domiciled.  The company announced the appointment of Jean-Christophe Rufin, said to be an expert in humanitarian action and human rights, to independently assess the situation in Cabo Delgado province.

Since that visit, however, media speculations had tended towards suggesting a likely return of TOTAL and its contractors to the site sometime in 2023. A March 2023 report quoting Saipem, the Italian contractor, as saying it had “agreed to restart a liquefied natural gas (LNG) project in Mozambique for TOTALEnergies in July 2023, was the biggest fuel in the speculation. “We expect to gradually restart the (Mozambique) project, according to the information received by our clients, starting from July this year,” Saipem CEO Alessandro Puliti said during a call on the group’s results for 2022.

TOTALEnergies itself never publicly gave any specific schedule of return.

Mozambique’s defence forces and their partners have since made inroads against the enemy since the April 2021 insurgent attack that “chased” TOTAL out of the project’s perimeter. The troops have taken back strategic roads and pushed the insurgents out of most of their bases, reportedly killing hundreds of fighters, according to International Crisis Group, a civil society organization with detailed monitoring scans on the challenges. “But despite being weakened, and seemingly no longer able to conduct complex and high-profile attacks al-Shabab (the terror group) adapted quickly, breaking up into small cells, the militants spread out across a larger area, raiding villages and security posts. Sixteen of Cabo Delgado’s seventeen districts suffered attacks in 2022”, the Crisis Group details in a comprehensive report in January 2023. “Insurgents also appear to be making occasional incursions into neighbouring Niassa and Nampula provinces and across the border with Tanzania and have also received their own boost from outside, as the Islamic State leadership named al-Shabab as one of its provinces, and more systematically began claiming the latter’s activities as its own”.

Mozambique is keen on taking advantage of the current high prices of LNG and the global shift towards cleaner sources of energy.

First Batch of Made in Algeria Gas Turbines Delivered to Iraq

Iraq has received the first shipment of gas and steam turbines made in Algeria by Geat complex, a partnership of Algerian state hydrocarbon firm Sonelgaz and the global engineering firm General Electric.

The invoice for the turbines approximately $112Mllion.

The complex is preparing to export shipments of other similar gas turbines and is negotiating with a group of potential customers, mainly in several African countries, to supply them with this type of equipment.

Shell Expects Massive Reduction in Egyptian Gas Output

Shell Plc is expecting a shortfall of 491Billion standard cubic feet of gas from what it planned to produce in Egypt between 2023 and 2025.

This is 85% of the company’s promised gas delivery to Egypt’s National Gas Grid for the period.

The shortfall is mainly caused by the performance of the West Delta Deep Marine fields being insufficient to meet the committed quantities to ELNG, the facility that ships natural gas from Egypt to Europe.

Egypt  has been keen on increased gas output, both to satiate its domestic appetite and to supply Europe’s needs. Shell, it seems with these figures, wouldn’t be able to help much with that.

If the government diverts more gas to the domestic market, this would increase the shortfall to ELNG.

Time to Break the Deadlock on TOTAL’s Offshore South African Gas Deal

By NJ Ayuk

TOTALEnergies has been trying to negotiate a deal that would involve pumping production from Luiperd through a 109-kilometre, 18-inch pipeline to the FA platform…

South Africa is a regional heavyweight. Its economy is one of the largest on the African continent — as well as the most diversified, the most industrialized, and the most technologically advanced. It has more extensive road and rail networks than any other African state, a feature that puts it in a good position for future growth.

But South Africa also has a very big problem. Since 2007, the national power provider Eskom has not been able to produce enough electricity to cover domestic demand —  and the ever-widening gaps between supply and demand have given rise to a steady deterioration in power supplies and citizens’ quality of life. They’ve made blackouts commonplace, and they led President Cyril Ramaphosa to take the unprecedented step of declaring a “national disaster” in February.

I’d like to say that South Africa has reason to look forward to relief within the next few years — that the country has laid a foundation for using its own natural resources to resolve its energy shortages and can expect conditions to improve over time. Unfortunately, it would be premature to make such a statement.

Here are some of the reasons why.

Coal, Carbon, and Gas

As detailed in “The State of South African Energy,” ( a new report prepared jointly by the African Energy Chamber, the country’s electricity shortages stem in large part from problems with Eskom’s coal-fueled thermal power plants (TPPs). These stations have long served as the backbone of South Africa’s power sector, but Eskom has failed to manage, maintain, and expand them adequately. Unfortunately, the results of its failure are glaringly evident in the form of load-shedding and increased reliance on diesel generators.

In the meantime, there’s another complication at hand, in that South Africa’s government has pledged to reduce the power sector’s carbon emissions intensity. That pledge hampers the country’s ability to compensate for Eskom’s previous failures by building more coal-burning TPPs or expanding existing facilities (steps the chamber believes are necessary to resolve the crisis). That means the country must find lower-carbon energy options.

One obvious lower-carbon energy source is a pair of massive natural gas fields that TOTALEnergies has found offshore in Block 11B/12B, a license area in the Outeniqua basin. According to documents the French major has submitted to South African authorities in the hope of securing environmental authorization for development, the two fields may hold as much as 4.5Trillion cubic feet of gas in recoverable resources. Luiperd, the larger of the two sites, appears to contain around 3Tcf (85 bcm) of gas, while Brulpadda field appears to contain another 1.5Tcf.

TOTALEnergies has been trying to negotiate a deal that would involve pumping production from Luiperd through a 109-kilometre, 18-inch pipeline to the FA platform, an existing offshore facility at state-controlled PetroSA’s Block 9. At the FA platform, the gas could then be transferred to existing infrastructure for delivery to customers on South Africa’s southern coast. Likely buyers would include PetroSA, which needs feedstock for its idle Mossel Bay gas-to-liquids (GTL) plant, and Eskom, which needs fuel for gas-burning TPPs.

Theoretically speaking, this deal makes a tremendous amount of sense for South Africa. The country needs a relatively low-carbon way to generate more electricity, and it just so happens to have a lot of gas available in fields off its southern coast. Shouldn’t it be rushing to develop these fields?

Bad Timing and Limited Patience

Practically speaking, though, South Africa hasn’t been in a rush at all. Instead, it has let the process play out for too long.

Last year, TOTALEnergies was upbeat, saying it was on track to wrap up a gas sales agreement (GSA) for Block 11B/12B in September 2022 — and that if it could do so, it would be in a position to start extracting gas from Luiperd in 2027. Since then, though, negotiations on the GSA have stalled out, largely because the state-owned companies involved in the process (PetroSA and Eskom) have been dragging their feet over questions related to pricing and financing.

In the meantime, load-shedding has only grown worse and worse, putting the country’s economic well-being and sparking civil unrest.

What’s more, TOTALEnergies has grown exasperated with the delays. As described in our report, it informed South African authorities in January 2023 that it was considering swapping the original plan to supply the domestic market for an alternative that would see future production exported via a floating liquefied natural gas (FLNG) vessel with a capacity of 3.4 million tons per year (tpy).

It’s easy to see how such an arrangement might benefit the French major and its partner, QatarEnergy. It would give the two companies a way to produce and deliver more LNG to markets in Europe and other regions where demand is high. However, the idea of fast-tracking a project in order to facilitate the export of gas from a country that’s running short of energy is so politically dicey that South Africa’s government is unlikely to approve it, which means that there may be even more delays ahead.

President Cyril Ramaphosa’s government can avoid that outcome, though, by taking the steps necessary to authorize TOTALEnergies’ original plan — that is, the one that aims to supply the domestic market — and make the FLNG option less attractive. This will involve taking practical steps such as providing guarantees for Eskom and PetroSA as they sign the GSA, since neither state-controlled company is in a solid financial position. But it will also involve summoning the political will to break the deadlock.

Ayuk, a lawyer and author, is the President of the African Energy Chamber

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