Half of Mozambique’s gas production will be delayed for five years, shooting a big hole in dreams that liquefied natural gas (LNG) would bail the country from its economic crisis. Exxon Mobile has again delayed its investment decision. The delay is likely to be five years, with no production until 2030 instead of 2025, according to Platts, the main oil industry newsletter (9 Apr, https://bit.ly/3a7zQmY)
ExxonMobile had planned to spend $27-30 bn. The final investment decision (FID) was to be announced last year but was deferred, with only an entirely artificial “intermediate investment decision” announcement to back Filipe Nyusi’s presidential campaign. Now the FID has been kicked into the far future.
ExxonMobile has planned 15.2 mn tonners per year (t/y) of LNG starting in 2025, half of the total production. Most of the money would have been spent on two gas liquification “trains” on the Afungi peninsula, on a shared facility with Total. Development of the other half of planned production continues – the joint ENI-Exxon floating 3.4 mn t/y plant now under construction and expected to start production in 2022, and the Total-operated 12.9 mn t/y onshore plant on Afungi now under construction and due to start production in 2024.
Globally, natural gas has been caught in a whirlwind of problems. As Saudi Arabia and Russia flood the market to try to put US shale gas and oil out of business, the price of Brent crude has fallen from $69 per barrel in January to $31 today. Gas prices are linked to oil, and global LNG prices have fallen from a peak of $11 per MMBtu in September 2018 to $4 in 2019 to just $2 now.
The global depression caused by COVID-19 will keep gas and oil prices low, causing major cuts in investment everywhere. Commentators such as Platts note that the on-going war in Cabo Delgado and attacks close to Afungi make investment there less attractive. And the Financial Times (7 Apr) noted that Exxon wanted to protect its large dividend to shareholders, $14.7 billion in 2019, so decided to make huge cuts in cash operating expenses and investment.