Anadarko Poised for Mozambique LNG Approval
US independent Anadarko said it awaits news on an expected Mozambican government approval of its initial LNG export venture. In 4Q 2017, it concluded the legal and contractual framework and has begun resettling residents who live where the site is to be built.
At a results briefing for analysts February 7, Mitch Ingram, executive vice president for international & deepwater operations, described the Area 1 LNG development – submitted to the Mozambique government for approval – as “the LNG project of the coming decade.” He was speaking shortly after Reuters news agency reported that the government had now granted approval for the project, adding that Maputo expects to receive $30.7bn by 2047 in tax and profit-sharing revenues from the planned project.
Ingram told analysts on the call that Anadarko had "heard encouraging news coming out of Mozambique about development plan approval” and looked forward to receiving that approval.
He said key terms were already agreed with buyers for the first 5mn metric tons/yr LNG sales, putting the project more than halfway towards its final investment decision target volume for its initial project of 8.5mn mt/yr. “We are negotiating with multiple buyers for the rest,” he added.
He also confirmed that it is looking to coordinate with the future Area 4 LNG project operator ExxonMobil and was “talking with Exxon” on how to achieve synergies – believed to be focused on the onshore LNG site roll-out. Ingram also said Anadarko is in talks with export credit agencies about financing its project. He did not give a target FID date, but said that the first LNG cargo would typically follow "five years after project sanction."
ExxonMobil said last week the scope of the Mozambique LNG projects that it is considering is "more than 40mn mt/yr" but did not say if that was just Area 4 planned volume, or an estimated combination of its Area 4 plans and the Anadarko-led Area 1.
Partners in Area 1 include Anadarko, Thai firm PTTEP and five others which together have found 75 trillion ft3 of recoverable natural gas, and last month PTTEP said it thought the initial Area 1 LNG venture could start up 2023.
This would be at the earliest end of many observers' range of expectations, given the political and economic uncertainties and the time it takes to build a plant once sanctioned; but the LNG market has moved quickly in the past year, prices rising particularly on the back of very strong Chinese demand. The long-awaited LNG wave – driven mostly by the US ramp-up and swollen with Yamal LNG – has yet to break on Europe.
Golfinho/Atum offshore gas reserves in Area 1 offshore Mozambique were enough to provide for a 12.8mn mt/yr LNG export venture, while the Prosperidade reserves (also on Area 1) provided upside from that, said Ingram.
Nonetheless 2018 capital investment in Mozambique is expected to remain low. CEO Al Walker said Anadarko expects to invest $4.1bn-$4.5bn of capital, of which 63% will go on US onshore, 23% in the US Gulf, 3% international, 5% on exploration, but only 3% on LNG.
The company said it was in talks with Algerian state Sonatrach on new projects, but gave few details. Ingram said maintaining its existing 55,000 b/d operated oil plateau in Algeria required minimal capex.
US independent Anadarko Petroleum reported late February 6 net 4Q 2017 income of $976mn – including a $1.17bn gain arising from US tax changes. For full year 2017, it reported a net loss of $456mn.
At core US onshore activities, it achieved end-2017 production of more than 150,000 b/d oil from its Delaware (north Texas) and DJ (Denver-Julesburg, Colorado) basins. Anadarko expects to grow oil volumes by 13% in 2018, and by 10-14%/yr in 2018-20, based on $50/b.
Anadarko’s full year total 2017 production (oil, natural gas, and liquids) both in the US and elsewhere averaged 672,000 boe/d (down 15% on 2016), while its 4Q 2017 figure was 637,000 boe/d (down 18% on 4Q 2016). At year-end 2017, its proved reserves were 63% liquids, 37% gas.