11 January 2018

Mozambique: Anardarko Discussing Sales of Mozambican Gas to China

Maputo — The American oil and gas company Anadarko is in discussions with potential Chinese buyers to supply them with liquefied natural gas (LNG) from its offshore projects in the Rovuma basin, off the northern Mozambican coast, according to a report by the Bloomberg news agency.

The discussions involve “a variety of Chinese counterparts, including national oil companies and emerging independent LNG buyers”, an Anadarko spokesperson said, adding that China's increasing consumption makes it “a long term strategic market for the Anadarko-led Mozambique LNG project”.

Bloomberg cites Emma Richards, a senior oil and gas analyst for BMI research, as saying that the Chinese demand for LNG could help spur investment decisions on projects to export LNG from East Africa. Anadarko and its partners have yet to announce a Final Investment Decision on plans to process natural gas from Rovuma Basin Offshore Area One.

Bloomberg notes that LNG prices were buoyed as Chinese imports rose almost 50 percent in the first 10 months of 2017, making it the world's third-largest buyer after Japan and South Korea.

Anadarko is lagging behind the second consortium involved in the Rovuma Basin, led by the Italian energy company ENI, which made its final investment decision last June for a floating LNG platform above the Coral South gas field, about 40 kilometres from the coast of Cabo Delgado province.

So far Anadarko has arranged sales and purchase agreement for around 2.6 million tonnes of LNG a year - but it needs many more such agreements to reach its target of over eight million tonnes.

“Mozambique's favourable central geographic location means the country is well positioned to meet the needs of customers in the Atlantic market and Asia-Pacific markets, in particular tapping into the growing demand for energy in China,” Anadarko said in an emailed response to questions from Bloomberg.

Increased Chinese demand for LNG may offset the glut in the gas market caused by shale gas production in the US.

“If you do have China coming into the market more strongly, looking to take up more volumes, then yes, certainly that would help the operators in Mozambique and Tanzania locking in those sales and purchase agreements, getting the financing in place, and moving the projects forward to development,” said Emma Richards.

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