Photographer: Bartek Sadowski/Bloomberg

Anadarko Finds Mozambique-Gas Buyers as State Mulls Go-Ahead

Updated on
  • Company obtains 90% of offtake pledges required for LNG plant
  • Final government approvals still needed for project to proceed

Anadarko Petroleum Corp. has clinched almost all the supply accords it needs to bring a natural-gas project in Mozambique to fruition and is awaiting state consent to export the fuel as U.S. competition gathers pace.

The company has obtained about 90 percent of the heads of agreement, or non-binding accords, it needs to finance an onshore liquefaction plant, country manager John Peffer said by phone from Maputo.

Reaching an investment decision on the liquefied natural gas project “is predicated on how quickly we can get the agreements from government,” Peffer said. “They’re motivated and we’re motivated.”

Africa’s projects to chill gas to a liquid for shipment by sea face competition from the U.S., which is moving ahead with its own export plans after shale production boomed. Mozambique passed laws in the past year to aid LNG development while President Filipe Nyusi, elected in October, made senior appointments to state energy companies ahead of a possible gas bonanza.

“Ultimately the timing for taking a final investment decision will be determined by the government’s pace agreeing the legal and contractual framework and approving necessary permits,” Peffer said. Anadarko expects to submit its development plan in the coming months.

Bucking Trend

The oil and gas producer, based in The Woodlands, Texas, is pursuing the $15 billion Mozambique project at a time when other energy companies have deferred large developments following the collapse in crude, which is trading at less than half its price a year ago. The LNG plant would allow shipments from the largest gas discovery in a decade. 

“Transition costs associated with the new Nyusi administration may slow things at the margin but ultimately its more technocratic bent should be a positive,” said Mark Rosenberg, an Africa analyst at Eurasia Group.

Anadarko has secured pledges from Asian buyers for more than 8 million metric tons of LNG a year, or about 90 percent of the contracts it needs to proceed with the 12 million-ton-a-year project, according to Peffer. Contractors led by Chicago Bridge & Iron Co. are also starting preliminary work after being selected in May.

As much as 75 trillion cubic feet of gas may lie in the Area 1 prospect off Mozambique’s shores, according to Anadarko and its partners. That’s enough to meet about 15 years of U.S. residential demand, Energy Information Administration data show.

The LNG project is likely to be completed, according to analysts at Bloomberg New Energy Finance. To the north, gas plans in neighboring Tanzania are “in limbo” as producers await a general election that may push the start of exports to 2025 at the earliest, BNEF said in a report this month.