Paul Eardley-Taylor, head of oil and gas, southern Africa, for Standard Bank shared his excitement about the emerging market of Mozambique when he addressed guests at the Big 5 Board Awards
He cross-referenced data from the BP Global Energy Outlook and the International Energy Agency (IEA) to showcase the potential of Mozambique, particularly as we are in an era where LNG demand is increasing by four per cent per year.
The IEA predicts that gas will overtake coal in the global energy mix by 2030 and LNG will play a major role in this shift. LNG demand is projected to increase from 293 MPTA to around 586 MPTA by 2040.
'Mozambique would represent 25 per cent of the world's incremental demand [for LNG] or higher," Mr Eardley-Taylor told guests. A big part of this demand will come from China, he said, with the Chinese government starting a programme to switch from coal to gas last year in its drive to improve air quality under the Blue Sky Defence Action Plan.
This, in turn, increased Chinese LNG demand by 40 per cent with LNG imports increasing by 50 per cent year on year. President Xi effectively becoming Chinese leader for life is significant, according to Mr Eardley-Taylor, as this means he is "personally underwriting Chinese air quality for the rest of his life."
Additionally, meeting local demand for energy will boost the Mozambican LNG market, as well as using gas for GTL projects and fertiliser manufacture. Mr Eardley-Taylor added that there will be opportunities in sectors such as small-scale LNG projects, LNG bunkering, methanol and olefins.
Development of the LNG sector continues apace with the fifth licensing round signed this year and a sixth-round expected in 2019. The country gained independence in 1975 and had a civil war from 1977 until 1992 with Capo Delgado, where there are large hydrocarbon deposits; hit very hard, Mr Eardley-Taylor told the event. 2004 represented a turning point for Mozambique with Sasol developing onshore gas. Anadarko's project, with FID expected in H1 2019, is "significant" according to Mr Eardley-Taylor, with the cabinet approving the plan of development.
FLNG, in particular, represents a massive opportunity for Mozambique to reverse its current financial status with national debt at 90 per cent of GDP. As well as the progress made by the Coral FLNG project with FID in June last year and first gas expected in 2022, Mr Eardly-Taylor ran through other promising gas projects in Mozambique, such as Golfinho (FID expected in Q2 2019); Rovuma (FID expected Q3, 2019 and fully commissioned by 2025); and Prosperidade LNG (FID expected 2024 and fully commissioned by 2029).
Looking ahead, the 30-year EPCC terms include a tight deadline for operators with all development plans to be submitted by late 2023 in a "use it or lose it" strategy which should encourage fast roll-out but is dependant on "whether the country can meet its obligations", Mr Eardley-Taylor said.
The level of FID is expected to reach US$128bn by 2025, which, if achieved, will be a massive boost to an economy with a GDP currently at US$14bn.