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EPC award for Mozambique LNG advances LNG in East Africa

Fri 07 Jun 2019 by John Snyder

EPC award for Mozambique LNG advances LNG in East Africa
An FID by Anadarko on the Mozambique LNG project is expected this month

Mozambique LNG, East Africa’s first leap into the LNG market, took a major step forward with the award of a multi-billion-dollar engineering procurement and construction contract by US-based Anadarko Petroleum.

The engineering procurement and construction (EPC) contract was awarded to CCS JV, a joint venture between US-based McDermott, Italy-based Saipem and Japan-based Chiyoda for the Mozambique Area 1 LNG Development.

CCS JV's project scope covers the EPC for all components of the onshore LNG development, including two LNG trains with a total nameplate capacity of 12.88 mta, plus the associated utilities and infrastructure. Previously, CCS JV provided front-end engineering design services for this LNG development. The project could potentially grow to 50 mta of LNG.

As lead operator for the EPC, Saipem’s share of the contract is US$6Bn, the largest in the company’s history. McDermott's initial portion of the EPC contract award is US$2Bn. Chiyoda will only provide advisory services for the JV.

Work at the site is expected to commence when Anadarko issues a notice to proceed after it takes FID, which is expected to be announced on 18 June.

While Anadarko is the operator of Offshore Area 1, that will all change soon thanks to US-based Occidental Petroleum’s US$57Bn deal to acquire Anadarko in May. In connection with the acquisition, Occidental has entered into a binding agreement to sell Anadarko’s Algeria, Ghana, Mozambique and South Africa assets to France’s Total for US$8.8Bn.

Other Offshore Area 1 investors include ENH Rovuma Área Um, SA, Mitsui E&P Mozambique Area1 Ltd, ONGC Videsh Ltd, Beas Rovuma Energy Mozambique Limited, BPRL Ventures Mozambique BV, and PTTEP Mozambique Area 1 Limited.

Mozambique is at the centre of LNG developments in East Africa. Enormous gas reserves off Mozambique’s coast in the Coral field, located in Area 4 in the Rovuma Basin, containing approximately 450Bn m3 of gas were discovered by Italy’s Eni in 2012. 

ExxonMobil is constructing and will operate onshore natural gas liquefaction and related facilities on behalf of Mozambique Rovuma Venture SpA, a JV between ExxonMobil, Eni and China National Petroleum Corp.

Meanwhile, Eni is building and will operate the Coral Sul floating LNG (FLNG) project, which will be moored in 2,000 m of water, making it the world’s first deepwater FLNG.

Tanzania is also in discussions regarding developing a deepwater LNG project.

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