Mozambique expects to ship its first liquefied natural gas (LNG) exports to Europe from the Eni-operated Coral Sul floating plant later this month or early November, petroleum regulator INP said on Friday in a supply boost for the energy-starved region.
BP's LNG tanker, British Sponsor, has already arrived offshore northern Mozambique, said Welligence Energy Analytics in a note, with all of Coral Sul's annual gas output of 3.4 million tonnes contracted to BP for 20 years on a free-on-board basis.
"Regarding the LNG export, it will be for European markets since BP is committed to take the gas resources to Europe," said the National Petroleum Institute (INP) in an emailed response to Reuters.
The new LNG cargoes will help alleviate a tight global LNG market and gas shortages in Europe as winter looms following Moscow's February invasion of Ukraine and Russia's later decision to curb gas pipeline supplies into major European Union economies.
As part of its exploration activity offshore Mozambique, Eni discovered Coral South gas field in 2012 and took its final investment decision in 2017, pledging to start producing gas using a floating LNG plant after five years. Thanks to a fast-track strategy led by CEO Claudio Descalzi, Eni has been able to stick to its original schedule despite the pandemic and supply chain issues.
The exports from Mozambique, which neighbors South Africa, will help transform its economy as billions of dollars pour into the country to develop massive offshore gas fields in its deepwater Rovuma basin.
But a sustained violent insurgency inland with links to Islamic State has scared off investors, as French oil major TotalEnergies last year declared force majeure on its $20 billion LNG project amid rising attacks in the north of Cabo Delgado province.
The five-year-old conflict has claimed more than 4,000 lives and displaced around one million people, said the World Bank, which expects economic growth to accelerate in the medium term, averaging 5.7% between 2022 and 2024, as LNG production starts.
In January, TotalEnergies CEO Patrick Pouyanne said on a visit to Mozambique that he hoped to restart its Afungi project this year, although INP said the company's return would likely be next year, depending on security assessments.
"We are satisfied with the improvement of stability in Cabo Delgado Province ... We are expecting Total to return by next year," INP said on Friday.
The regulator said ExxonMobil, which had indicated it would only resume a final investment decision on its own LNG project in Area 4 of the Rovuma basin once Total had lifted its force majeure, was also seen returning to its project early in 2023.
"This also means that we won't have stranded resources in Rovuma Basin at the same time that we know that natural gas is playing an important role as an energy for transition," it said.
INP will launch a new oil and gas licensing round next year with details still to be worked out. The winners of the current 6th bidding auction is on track to be announced on Dec. 30, it added.
(Reuters - Reporting by Wendell Roelf; additional reporting by Francesca Landini in MilanEditing by Mark Potter)