Mozambique LNG Signs Deal (Update from EDF)
updates in final para with comment from buyer EDF
US independent Anadarko announced February 20 that Mozambique LNG, the jointly owned sales entity of the Mozambique offshore Area 1 co-venturers, has entered into a long-term LNG sale and purchase agreement (SPA) with French power giant EDF.
The offtake agreement is the supply of 1.2 mn metric tons/yr for a term of 15 years. No details on pricing or start-date were given.
"EDF is one of the world's largest electric utilities, and reaching this SPA continues to validate Mozambique LNG's position as a competitive long-term LNG supplier and as one of the world's leading greenfield projects," said Mitch Ingram, Anadarko executive vice president, international and deepwater operations and project management.
"Mozambique LNG is unique in its ability to supply LNG to a variety of geographic locations to serve its customers, and this SPA gives us flexible access to Europe, which is one of our key strategic markets. The EDF sale is included in the portfolio of sales of more than 5mn mt/yr for which we have agreed key terms, and we continue to advance additional off-take arrangements," added Ingram.
Anadarko expects its project will be Mozambique's first onshore LNG development, initially consisting of two LNG trains with total nameplate capacity of 12.88mn mt/yr to support the development of the Golfinho/Atum fields in offshore Area 1.
The US firm has a 26.5% stake as operator in Area 1; co-venturers are Mozambican state ENH 15%, Japan's Mitsui 20%, Indian trio ONGC Videsh 10%, Bharat PetroResources 10% and Oil India 4%, plus Thai state upstream firm PTTEP 8.5%.
Two months ago Japan's Tohuku Electric signed an offtake deal for up to 280,000 t/yr of LNG 15 years. On February 7, the Area 1 consortium received country approval from Mozambique to proceed with the LNG venture, a key milestone towards a final investment decision. Anadarko has so far declined to give a target date for when such an FID will be taken. However, interpolating from recent statements by PTTEP, the FID could be taken this year, with PTTEP saying the first cargo might be by 2023.
Update 11.25am GMT, February 20
EDF also confirmed signature of the offtake agreement, adding that it will purchase LNG from Mozambique LNG on a delivered ex-ship basis at the Dunkirk (Dunkerque) LNG terminal in northern France. "Deliveries are expected to begin as early as 2023, for a period of up to 15 years; the SPA is subject to the Mozambique LNG project being developed," noted EDF's statement. Its senior executive vice president for gas and Italy, Marc Benayoun, said: "This agreement goes in the direction of enhancing EDF’s ability to meet the Group’s customer requirements and France’s security of supply through geographical diversification.”
EDF however declined to comment to NGW about the pricing of this offtake agreement.
There have been suggestions in the recent past that Anadarko would take a more flexible approach to pricing of Mozambique LNG contracts than established LNG marketers such as Shell, Total and ExxonMobil that still mainly index long-term contracts to oil prices. Although EDF trades some of its portfolio globally, most of its LNG imports go to northern Europe and Italy where gas hub indices such as the Dutch TTF or Italian PSV are preferred by LNG importers.
However LNG consultancy Poten & Partners recently reported a tendancy at a global level for a return to more oil -indexed pricing among new LNG offtake contracts signed in 2017.