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Anadarko pushing ahead with Mozambique LNG

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U.S. energy company Anadarko is pushing ahead with its planned $20 billion Mozambique gas export project and will make a final investment decision once the government approves its development plan.

“We’re working full out to achieve a final investment decision as soon as possible,” Anadarko’s country manager John Peffer told Reuters in Maputo, without committing to a timeline.

Other oil and gas companies have deferred large development projects following a sharp fall in oil prices. And there was speculation earlier this year that Anadarko might sell assets in Mozambique.

Peffer said the investment decision was dependent on the government approving its development plan which it was submitting very soon. He said that pulling out of the project was “not an option.”

Once the plan is submitted the government has, by law, nine months to respond, potentially adding to costs.

Anadarko aims to have its first LNG cargo leave Mozambique by the end of the decade, Peffer said, delayed from an original plan of 2018.

But two industry sources close to the project said 2020 was unrealistic. “Even if it went without a hitch, five years is probably not enough to finish this level of infrastructure,” one of the industry sources said.

Johannesburg-based Standard Bank estimates Mozambique, one of the world’s poorest countries, has the potential to become the third largest LNG supplier in the world, adding $39 billion a year to the southern African country’s economy.

Italian energy firm Eni is also developing gas off the coast of Mozambique using offshore floating facilities.

Peffer said Anadarko had non-binding agreements with Asian buyers for 8 million tonnes of LNG a year, or around 90 percent of the contracts it needs to proceed with the project.

He said the company had indications of interest from export credit agencies for 60 percent of the project’s funding.

One remaining issue is Anadarko’s re-settlement plan, which will involve moving thousands of Mozambicans from their homes in the region where the LNG facilities will be built and paying for new accommodation elsewhere.

Some civil society groups have raised concerns about poor communities being forced to leave their homes by re-settlement plans. Peffer said Anadarko would submit its re-settlement proposal to government imminently.

Brazil’s Vale re-settled communities in Mozambique’s Tete province where it was developing coal, leading to widespread protests in 2012 and drawing criticism from human rights groups.

“Re-settlement is something we take extremely seriously and it needs to be managed carefully,” Peffer said. “We are following all of Mozambique’s laws and international best practices.”

Source: Reuters

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