South Africa’s mooted gas-to-power independent power producer (IPP) programme stands to benefit from Mozambique’s Coral Floating Liquefied Natural Gas (FLNG) development, according to Standard Bank head of oil and gas: Southern Africa Paul Eardley-Taylor.
The Coral field, discovered in May 2012, is located within Area 4, Mozambique and contains approximately 450 billion cubic meters (16 TCF) of gas.
Italian energy company ENI last year announced that it had signed a sale and purchase agreement with the US company ExxonMobil, under which ExxonMobil will pay US$2.8 billion for a 25 per cent stake in offshore Area 4, which is situated in the Rovuma Basin in northern Mozambique.
Eardley-Taylor this week said, post commercial operations, Coral LNG would generate cash flows for Mozambique – through tax proceeds – as well as balance of payment benefits.
“It is a landmark investment in Mozambique that represents over 70 percent of 2016 gross domestic product. FLNG is also a pathfinder that gives momentum to Mozambique’s developing onshore LNG projects, which as well as major tax proceeds offer significant localisation, employment and domestic gas opportunities,’’ he said.
He said increased industrial activity in Mozambique would benefit South Africa as a major trade partner with Mozambique. “In addition, South Africa has explored a gas-to-power programme and Coral FLNG is a future potential physical supplier to that scheme, noting the low shipping costs involved,’’ said Eardley-Taylor.
Standard Bank and its 20 percent shareholder, the Industrial and Commercial Bank of China (ICBC), have backed Mozambique’s Coral Floating Liquefied Natural Gas (FLNG) development. Through an investment of approximately $8bn investment, they are the project’s largest lenders. Standard Bank said the investment marked Mozambique’s first step as a regional and global offshore natural gas producer and supplier.
“This game-changing transaction initiates a cycle of energy investment set to return Mozambique to growth, while heralding the country’s arrival as a key global liquefied natural gas supplier.
“Our support of the funding of the Coral FLNG project grew out of our long-term commitment to Mozambique, consistently supporting the country’s potential as a future offshore natural gas production and export giant,” said Eardley-Taylor.
In addition to the Coral FLNG project, Standard Bank has worked with other companies in Mozambique. These include Sasol, The Republic of Mozambique Pipeline Investments Company (ROMPCO), Mozambique’s state-owned oil and gas company ENH ENH, Companhia Mocambiçana de Gasoduto S.A (CMG, and Companhia Moçambicana de Hidrocarbonetos (CMH). Standard Bank also authored Mozambique’s landmark LNG macro-economic study informing the development of the 2014 Rovuma Basin Decree law.
The transaction was in line with Standard Bank and ICBC’s vision and strategy to develop East Africa as global energy production and supply hub – especially to East Asia, Standard Bank said.
“Global interest in Mozambique and the region’s potential as future energy suppliers is reflected by broad international participation in the deal. Export credit agencies, including Coface (BPI), K Exim, K Sure, Sace and Sinosure, are joined in this transaction by leading global energy giants ENI, Petrochina, GALP, ENH and Kogas,” Standard Bank said.
ICBC and Standard Bank said the deal was an important signal on Mozambique’s longer term growth prospects.
“This transaction demonstrates ICBC and Standard Bank’s vision of driving Africa’s growth by attracting foreign direct investment back into Mozambique’s promising energy production and export sector. This game changing transaction puts East Africa on the map as a global energy supplier,” said Eardley-Taylor.