The firm sees Mozambique having the potential to become one of the largest liquefied natural gas (LNG) suppliers in the world and the project is expected to export to countries in Asia and Europe.
Wednesday 19, June 2019
(Bloomberg) --Anadarko Petroleum Corporation has approved a $25 billion LNG project in Mozambique which could help transform the economy of one of the world’s poorest countries.
Al Walker, Anadarko’s Chief Executive Office signed a final investment agreement with Mozambique President Filipe Nyusi in Maputo.
The project will be funded with $11 billion of equity and $14 billion of debt.
“Over time this project will double this country’s GDP,” Walker said.
It’s taken the American company nearly a decade to green-light the development after discovering gas in Mozambican waters in 2010. The country had to draft new regulations for its nascent oil and gas industry, even as uncertain global demand for LNG slowed down plans.
Mozambique expects $95 billion of revenue over 25 years from this project and others led by Exxon Mobil and Eni.
Developing hydrocarbon resources is crucial for the Southern African nation, which has struggled to service its debt in the past.
Mozambique LNG is at the centre of a new restructuring deal the government reached with a core group of its euro bond holders last month. While investors will no longer have access to future revenue from the project, the in-principle agreement allows the administration to pay a lower interest rate until after the country’s gas production begins in 2023.
Occidental Petroleum agreed to buy Anadarko earlier this year. Once the deal is completed, Total has an arrangement with Occidental to acquire all of Anadarko’s African assets for $8.8 billion, including Mozambique LNG.
The project will have the capacity to produce 12.9 million tonnes a year in the first phase, with the scope to expand to as much as 50 million tonnes. It has contracts with key global importers in Asia and Europe and Mozambique’s location between the Pacific and Atlantic basins is an advantage that will help the country compete with a booming number of LNG suppliers.