Mozambique’s long-delayed offshore gas project with Italy’s Eni could be approved within months, sources close to the deal said, sparking investments with the potential to transform one of the world’s poorest countries into a major energy player.

Mozambique made one of the world’s biggest gas finds in a decade in 2010 but negotiations with operators Eni and U.S. firm Anadarko have dragged on for years due to disputes over terms and concerns about falling energy prices.

But Eni has in recent weeks struck deals with contractors and Mozambique’s government which could help it to make a final investment decision (FID) on Oct. 31, industry sources said.

Eni declined to comment. The company’s Mozambique concession is split between two huge gas fields, called Coral and Mamba. Eni has previously said it expects to make FID on Coral this year and Mamba in 2017.

Reserves in Mozambique’s Rovuma Basin amount to some 85 trillion cubic feet — enough to supply Germany, Britain, France and Italy for nearly two decades. It is likely to take at least five years after FID before gas production begins.

Samsung Heavy said last week it was in exclusive talks with Eni to provide a floating liquefied natural gas (LNG) platform as part of a consortium with Technip and Japan’s JGC, in a contract worth around $5.4 billion.

General Electric has also been approved as a contractor, two sources said.

Negotiations with government over tax terms and the funding of the Mozambique national gas company have also made moved forward in the last two months, the sources said.

Eni has already reached a deal to sell the gas to BP.

“There has been significant progress in the last few weeks. It’s making investors a lot more optimistic FID isn’t too far away,” one banker involved in the deal told Reuters.

FINANCING

The last major sticking point is how Eni will finance the $11 billion development, the sources said.

Eni is expected to raise several billion dollars by splitting its concession in two and selling up to 20 percent of its Mamba gas field, and the operating rights, to Exxon Mobil, sources involved said.

Any sale by Eni would provide a much-needed capital gains tax windfall for the Mozambican government during a period of economic crisis and as it struggles to make repayments on $1.35 billion in controversial foreign loans.

The International Monetary Fund suspended aid to Mozambique in April because of the hidden debt.

“There’s definitely been more urgency on the government side to get these gas deals moving,” one industry source said.

While Eni will drill and process gas from floating offshore platforms, Anadarko is building sprawling LNG facilities on the northern Mozambican mainland, causing complications due to local residents who will need to be relocated.

Anadarko submitted a plan to resettle thousands of mostly farmers and fishermen who will be displaced by the LNG project last month, one of the last hurdles to jump before getting the go-ahead on a $24 billion project, two sources said.

Mitch Ingram, who was previously with BG, was hired by Anadarko last year to head its LNG business. Ingram’s experience has given investors more confidence about Anadarko’s ability to raise financing, the sources said.

Anadarko’s project is expected to lag Eni’s and its final investment decision is unlikely this year, the sources said.

Anadarko did not respond to request for comment.

Source: Reuters