Mozambique: Anadarko Announces LNG Sales Agreement With Chinese Oil Company

Mozambique's Cabo Delgado province.

London — The Texas-based Anadarko Petroleum Corporation on Friday announced that Mozambique LNG1 Company Pte Ltd has signed an agreement with China's state-owned hydrocarbon company CNOOC for the long-term supply of LNG (Liquefied Natural Gas) from the northern Mozambican province of Cabo Delgado. Under the agreement, CNOOC will purchase 1.5 million tonnes of LNG per annum for 13 years.

Mozambique LNG1 is owned by Anadarko and its partners in the consortium which is developing the infrastructure to extract and process natural gas from Offshore Area One in the Rovuma Basin.

Commenting on the accord, Anadarko's executive vice president Mitch Ingram described CNOOC as "an important global energy player in one of the biggest and fastest growing LNG markets in the world". He added, "this deal gives China's largest LNG importer access to Mozambique LNG's world-class gas resources, which are strategically located off the East Coast of Africa and will provide China with a clean source of energy for years to come".

The Anadarko-led consortium plans to build two LNG plants on the Afungi Peninsula, in Palma district, with a total capacity to produce 12.88 million tonnes of LNG per year. However, before it takes its Final Investment Decision it must tie as much of this supply as possible to long term deals to open the door to finance the project.

The deal with CNOOC is one of a series of agreements with buyers and pushes the project towards the target for sales agreement that some commentators estimate is 8.5 million tonnes per year. This will put the project on track to take its Final Investment Decision in the first half of this year and could put into motion the construction of the plant with production possibly beginning in 2024.

Anadarko is the operator of Offshore Area One with a 26.5 per cent working interest. Its partners are Mozambique's National Hydrocarbon Company ENH (15 per cent), the Japanese company Mitsui (20 per cent), the Indian companies ONGC Videsh Ltd, Beas Rovuma Energy Mozambique Ltd and BPRL Ventures Mozambique (with 10 per cent each), and PTTEP of Thailand (8.5 per cent).

Offshore Area One is estimated to contain 75 trillion cubic feet of natural gas.

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