A final investment decision on the challenging Rovuma liquefied natural gas project in Mozambique will only be made after the partners have a better understanding on costs, according to a senior manager with Italian major Eni.

The huge two-train Rovuma LNG plant — to be sited at Afungi in Cabo Delgado province — will be fed by gas from the massive Mamba field in Offshore Area 4, where Eni and ExxonMobil are the key partners.

The Italian major is leading the upstream development of Mamba, while ExxonMobil is responsible for the LNG element of the project.

Afungi is also the location of Total's Mozambique LNG project — fed by gas from Offshore Area 1 — which is due on stream in 2024 or 2025, having been sanctioned in 2019.

Costs optimisation

Alessandro Puliti, Eni's chief operating officer of natural resources, said late last week that "the operators (Eni and ExxonMobil) are currently looking for synergies with the Area 1 development, and are also looking at all possibilities to reduce costs in the new market conditions after the (coronavirus) pandemic".

"We expect to update the FID date during 2021 when this exercise on cost optimisation will be competed," he told analysts during the company's 2021-2024 strategy day on Friday.

When asked again whether this meant the project could be sanctioned this year, Puliti confirmed only that 2021 is when the cost optimisation exercise will be completed.

The development was expected to secure a final investment decision in 2020, but the timing was then pushed back to 2021.

ExxonMobil repsonse

However, no partners have gone on the record to say Rovuma LNG will be approved this year, which has led to speculation that sanctioning could slip to 2022.

Asked about a potential timing for sanctioning the development, an ExxonMobil spokesman said only: "A final investment decision for the Rovuma LNG project in Mozambique has been delayed. We continue to work closely with the Area 4 partners, as Rovuma LNG is a complex project that will take several years to develop."

Upstream exclusively reported in October that ExxonMobil asked the JFT consortium chosen to build the Rovuma LNG complex to submit a fresh commercial offers as it strove to cut the expected $23 billion cost of the mega project.

A source familiar with the bid process said that a revised price was submitted "before Christmas" by the consortium of Japan’s JGC, Fluor of the US and UK-based TechnipFMC, but as of last month there had been little feedback from the Rovuma LNG operator.

Rovuma’s two initial LNG trains, with a combined capacity of 15.2 million tonnes per annum, will be built by JFT under a conditional contract awarded last October, pending sanctioning of the scheme.

Islamist insurgency threat

Total's Mozambique LNG development was sanctioned in mid-2019 and is due to be operational in 2024, although the schedule may be adversely impacted by an Islamist insurgency in Cabo Delgado province that has encroached on the site.

Insurgents encroached on the project site at Afungi last month, with Total chief executive Patrick Pouyanne saying two weeks ago that this forced the evacuation of all but essential workers.

Pouyanne told analysts that an action plan had been drawn up on the deployment of security forces and an agreement reached with the government to control a perimeter of at least 25 kilometres around the Afungi site.

“It is the government’s responsibility to secure the area for this project to continue. With the deployment of forces, the whole of Cabo Delgado province will be secure,” he said.

Commenting on the unrest, ExxonMobil's spokesman said: "We continue to monitor security developments in the Cabo Delgado region and work closely with the government regarding appropriate safeguards to protect people, operations and facilities."

Whenever Rovuma LNG is sanctioned, it will likely have a shorter build time because it will be making use of existing facilities and building on the experience of Total and its contractors.

LNG

Rovuma LNG: Still no sanction date in sight for delayed Mozambique mega project