Eni launches multi-billion dollar gas project in Mozambique

Samsung Heavy Industries' latest order further extends its order record for 2017 including 8 tankers, 2 LNG carriers, a LNG-FSRU, a FLNG, and a FPU totaling 13 vessels at 4.8 billion Dollars.

Eni has signed contracts and inked regulatory and financial agreements for its proposed Coral South floating LNG (FLNG) project offshore Mozambique.

The Coral South FLNG Project is for KOGAS to construct an FLNG in the Coral South area of Mozambique's marine gas field (Area 4) jointly with Eni of Italy, CNPC of China, GALP of Portugal and ENH of Mozambique and sell LNG for a long period.

The Coral field is located within Area 4 and contains approximately 450 billion cubic meters (16 TCF) of gas in place.

Despite the challenging price environment in the last few years, the launch of this project is testament to the quality of the assets in place and to Eni's technological leadership in the development of deep-water gas fields.

Claudio Descalzi, the chief executive officer at Eni, said the project is a win-win as it capitalizes on the emerging LNG sector while delivering returns to the economy of Mozambique. The project will generate annual gross revenues of over US$1.5bn per year (before tax) for 25 years, utilising 4.7 trillion ft of gas over its lifetime.

Eni said project finance would fund 60 percent of the cost of building the floating LNG facility, while the financing agreement has been subscribed by 15 major global banks and guaranteed by five export credit agencies.

That target date for first LNG was absent from Eni's communique, and is anyway some two years later than Eni had originally envisaged - largely because difficulties in arranging financing in debt-laden Mozambique, and other matters, set back the schedule for FID from mid-2015 to mid-2017. "Majors Eni, Shell, Exxon and recently BP have all now endorsed the floating LNG concept". Samsung Heavy Industries is leading the market by clinching three out of four new orders for FLNG vessels placed worldwide this year.

Eni led a group that signed off on a $7bn investment in a project to export natural gas from Mozambique.

  • Zachary Reyes