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Eni-Anadarko African LNG Plant to Be World’s Second-Largest

December 21, 2012

Eni, Anadarko Plan World’s Second-Largest LNG Plant in Africa

The ENI SpA logo sits on the company's headquarters in Rome. Photographer: Alessia Pierdomenico/Bloomberg

Eni SpA (ENI) and Anadarko Petroleum Corp. (APC:US) agreed to build the world’s second-largest liquefied natural gas plant in Mozambique to start exporting fuel in 2018.

Italy’s largest oil company and Anadarko will coordinate development of gas fields and cooperate in the construction of the plant in the Cabo Delgado province of northern Mozambique, which could have an eventual capacity of about 50 million tons a year, The Woodlands, Texas-based company said today in a statement. That would make it the largest LNG plant outside Qatar, the world’s biggest exporter of the fuel.

Mozambique’s offshore fields may hold as much as 250 trillion cubic feet of gas, enough to meet world consumption for more than two years, according to national oil company Empresa Nacional de Hidrocarbonetos. Companies such as Royal Dutch Shell Plc (RDSA) and Total SA (FP) have indicated an interest in joining projects in East Africa, while both Anadarko and Eni have said they may sell some of their assets in Mozambique to cut costs.

The agreement will “lead to a unitization agreement to further facilitate the efficient development of the common resources, as well as the independent reservoirs on both blocks, enabling enhanced economies of scale through shared infrastructure and facilities,” Anadarko Chief Executive Officer Al Walker said in the statement.

Mozambique is competing with neighbor Tanzania to produce East Africa’s first LNG. Statoil ASA (STL) and Exxon Mobil Corp. (XOM:US) today announced the third gas discovery in the Lavani-2 well off Tanzania.

Africa Rises

“If the recent discoveries of natural gas are confirmed, Mozambique will rank fourth in the world for natural-gas reserves -- behind Russia, Iran and Qatar,” Marin Katusa, an analyst at Casey Research LLC, wrote in a report released this week. “It’s not far-fetched to imagine that Africa -- not the Middle East -- will be the most important energy producer for the world in 2040 or even 2030.”

Eni and Anadarko will have “separate yet coordinated offshore activities,” in both Area 4, operated by Eni, and Area 1, operated by Anadarko, the Italian company said in a separate statement. They “will jointly plan and construct common onshore LNG liquefaction facilities.”

BG Group Plc (BG/), which also explores for gas in Tanzania, may join forces with the Statoil-led venture to build a unified LNG plant in the African nation. At the same time, Petroleo Brasileiro SA (PETR4) of Brazil plans to sell its assets in Tanzania where it explores with Shell.

Awarded Contracts

Anadarko and Eni awarded front-end engineering and design contracts for both onshore LNG construction and offshore installation, the U.S. explorer said. Technip SA (TEC), a venture between Subsea 7 SA (SUBC) and Saipem SpA (SPM), and McDermott International Inc. (MDR:US) together with Allseas USA Inc. will design the offshore infrastructure.

The LNG engineering will focus on production units, also called trains, with a 5 million-ton-a-year capacity, according to Anadarko. The plant’s gas supply will be split evenly between the Anadarko-led project and Eni’s development, Mitsui & Co. (8031), a partner in Anadarko’s project said today in a statement.

Bechtel Group Inc. and ventures between JGC Corp. (1963) and Fluor Corp. (FLR:US), and Chicago Bridge & Iron Co. and Chiyoda Corp. (6366), will design the LNG plant, according to Anadarko.

The Eni-led venture holds about 23 trillion cubic feet of gas “exclusively” in its Area 4, the company said Dec. 5. The Rome-based company in October said it has been examining plans for a separate development of this resource, including a possible floating LNG plant or a compressed natural gas facility for exports to neighbor countries.

To contact the reporter on this story: Eduard Gismatullin in London at egismatullin@bloomberg.net Yuriy Humber in Tokyo at yhumber@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net


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Companies Mentioned

  • APC
    (Anadarko Petroleum Corp)
    • $99.26 USD
    • -2.18
    • -2.2%
  • XOM
    (Exxon Mobil Corp)
    • $92.86 USD
    • -1.19
    • -1.28%
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