• Tuesday, May 21, 2024
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In sign of competition ahead, Mozambique sends first LNG cargo to Europe

LNG spot prices surge over 40% amidst Israel-Hamas conflict

Data from the Platts Flow ship tracking tool from S&P Global Commodity Insights showed Mozambique has officially started exporting liquefied natural gas (LNG) produced in the country’s north which is plagued by jihadist attacks.

“It is the first shipment of gas under a long-term purchase and sale contract with British giant BP,” data shows.

According to Welligence Energy Analytics, BP’s LNG tanker, British Sponsor, has already arrived offshore northern Mozambique, with all of Coral Sul’s annual gas output of 3.4 million tonnes contracted to BP for 20 years on a free-on-board basis.

Findings showed the new LNG cargoes will help alleviate a tight global LNG market and gas shortages in Europe as winter looms following Moscow’s February invasion of Ukraine and Russia’s later decision to curb gas pipeline supplies into major European Union economies.

“The first shipment of LNG from Coral South project, and from Mozambique, is a new and significant step forward in Eni’s strategy to leverage gas as a source that can contribute in a significant way to Europe’s energy security,” commented Eni CEO Claudio Descalzi.

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The next LNG project to take shape is likely to be that of the consortium headed by the French company TotalEnergies, at the Afungi Peninsula in Cabo Delgado. But TotalEnergies has made it clear that it can only resume the onshore LNG project once the security situation has improved.

Experts say that based on the large gas discoveries over the past decade, Mozambique may emerge as one of the largest LNG exporters in the world.

The exports from Mozambique, which neighbours South Africa, will help transform its economy as billions of dollars pour into the country to develop massive offshore gas fields in its deepwater Rovuma basin.

Nigeria a top LNG producer will rue its inability to bring on two important LNG projects, Olokola LNG and Brass LNG, which could have added more 22 million tonnes per annum to Nigeria’s capacity.

“Definitely would have been a profitable venture to Nigeria at the current state of global demand for LNG. But concerns by IOCs pertaining to the project economics and investment justification of the Olokola LNG project caused a delay for final investment decision (FID), hence the abandonment of the scheme,” said Etulan Adu, an energy professional.

He said: “A similar situation occurred with the Brass LNG, resulting in the FID not being reached. These abandoned projects would have created more than 20,000 jobs locally during construction and thousands of jobs when operational”.

“With high demand for global LNG, the inclusion of natural gas in Europe’s energy transition agenda and the cut from Russian gas, Nigeria would have been a significant benefactor from the current energy crisis in Europe and other parts of the world,” Adu concluded.