LNG

Mozambique, the newest liquefied natural gas exporter, has voted for the creation of a Sovereign Wealth Fund similar to that in oil and gas producing nation Norway to make sure the Mozambican people benefit from current and future LNG expansions led by major international energy companies.

TotalEnergies, the developer of the onshore Mozambique liquefied natural gas project in southeast Africa, said it rejected a complaint filed against it in a Paris court alleging manslaughter and a failure to assist people in danger during the terrorist attacks that took place in northern Mozambique in March and April 2021.

ExxonMobil Corp. posted first-quarter 2022 earnings of $5.58 billion compared with $2.73Bln in the prior-year quarter and $8.87Bln in the previous three months with a $3.4Bln hit taken on exiting Sakhalin-1 oil in the Russian Far East amid progress on Mozambican LNG and Permian Basin activities.

Oil-equivalent production was 3.7 million barrels per day, down 4 percent from the fourth quarter of 2021 due to weather-related unscheduled downtime, planned maintenance, lower entitlements associated with higher prices and divestments.

“The quarter illustrated the strength of our underlying business and significant progress in further developing our competitively advantaged production portfolio,” said Darren Woods, Chairman and Chief Executive.

“Earnings increased modestly, as strong margin improvement and underlying growth was offset by weather and timing impacts. The absence of these temporary impacts in March provides strong, positive momentum for the second quarter,” stated Woods.

Average realizations for crude oil increased 28 percent while first-quarter 2022 downstream earnings were $300 million compared with $1.5Bln in the fourth-quarter 2021.

“Improved industry fuels refining margins and lower expenses were partially offset by lower basestock margins and lower volumes, driven by higher turnaround activity,” said the Irving, Texas-based major.

Permian output

Production in the Permian Basin reached 560,000 barrels per day at the end of the quarter.

“The company remains on track to deliver a production increase of 25 percent this year versus full-year 2021 and to eliminate routine flaring by year-end,” added ExxonMobil.

CEO Woods later discussed the earnings in a conference call with analysts.

“Looking forward, we're also growing our globally diverse portfolio of low-cost, capital-efficient LNG developments,” explained Woods.

“In Mozambique, the 3.4 million ton per year Coral South floating LNG production vessel is being commissioned after arriving on site in January,” he added.

“Coral South is on budget with the first LNG cargo expected in the fourth quarter,” said Woods.

The CEO also explained that the company was making “outstanding progress” on its high-value growth developments in Guyana in South America, in the Permian and in LNG projects.

“Our new Corpus Christi chemical complex is up and running ahead of schedule and generated positive earnings and cash flow in its first quarter of operations,” added Woods.

“In a broad comment on the LNG business, we're seeing across each of our sectors, the pandemic had a pretty profound effect with respect to deferring, delaying capital spend, and, therefore, additional capacity coming on. And as the pandemic has subsided and demand has recovered, we're seeing very tight markets,” explained Woods.

“And then with the Ukraine and the situation there, that has added a significant additional level of uncertainty around supply,” he said.

Dynamic LNG

Woods said the LNG market was currently “very dynamic” and a very high-priced market.

“There is basically very full capacity utilization all around the world, maximizing the amount of LNG moving,” he said.

“Obviously, we've got our Coral LNG starting up later this year, which will help contribute and ease some of that tightness. And then there is Golden Pass,’ added Wood.

“This is an important leg of our strategy of making sure that we have access to LNG supplies that we can supply demand all around the world,” stated the CEO.

“And that's a very important part of our strategy in LNG going forward, is making sure that we've got barrels that we can then move and trade in the marketplace and move across the different regional demand centers. And so I think we're going to continue to look for opportunities in LNG,” declared Woods.

The CEO pointed to opportunities in Papua New Guinea LNG that the company was progressing.

“Obviously, additional investments in Mozambique are in the future as well. And so I think it'll be a very important foundational layer of supply and a really important part of our overall business offering,” he concluded.

European energy major Total has formally resumed a full work schedule on the Mozambique LNG export project after the government in the southeast African nation improved security arrangements in Cabo Delgado province.

The Ministry of Petroleum and Mineral Resources of the Federal Republic of Somalia has launched the former war-torn nation’s first offshore licensing round on a coast where in the territorial waters of countries further south large natural gas finds have been made with LNG export projects planned.

Due to the global travel restrictions caused by of the Cobid-19 pandemic, the Somali Ministry decided to launch the licensing round roadshow virtually.

Somalia is attempting to returning to the international fold after decades of being known mostly for piracy, terrorism and violent militia activity.

The nation was helped in the run-up to the exploration and production licensing offer with a roadmap drawn up by ExxonMobil and Royal Dutch Shell.

The 2020 Somali licensing round features up to seven blocks that are up for the bidding process and are estimated to be among the most prospective areas for hydrocarbons.

An independent partial assessment of the 15 Somali blocks have found there may be a minimum of 30 billion barrels of oil equivalent in shallow and deepwater, which is easily accessible so long as the area remains free of piracy.

Countries south of Somalia on the Indian Ocean Coast such as Tanzania and Mozambique have made substantial offshore resource discoveries, especially of natural gas, with the Mozambicans able to plan world-class LNG projects.

This current licensing round will open on August 4 this year and will be closed March 12, 2021.

Somalia’s virtual launch of the licensing round was seen as a landmark moment in the development of Somalia’s natural resources, which will be transformational for the country’s development.

According to the Ministry, Somalia will be aiming for reliability and transparency for the oil and gas companies willing to be investors and who are prepared to do business with the Somali Government.

“A ground-breaking Petroleum Law completed its legislative process earlier this year,” said a statement.

“The Revenue Sharing Agreement enshrined in The Petroleum Law indicates how future revenues from the development of the industry will be shared between The Federal Government, the Federal Members States and their local communities,” it added.

The Ministry said the agreement has now been “road-tested” with the first revenues, which were recently generated from rental payments from Shell and ExxonMobil.

“The opportunities for the international exploration and development majors are enormous,” said Abdirashid Mohamed Ahmed, the Minister of Petroleum.

“Somalia is committed to attracting investment and promoting partnership and business in all segments of the oil and gas industry value chain,” he added.

Life in Somalia is returning to normal after decades of being a failed state and depicted in films such as “Black Hawk Down”, covering the Battle of Mogadishu in October 1993 between US and United Nations troops and Somali militia.

Piracy off the coast of Somalia was illustrated in another movie based on the true experiences in 2009 of “Captain Phillips”, master of the US-flagged cargo vessel “Maersk Alabama”, which was hijacked.

Somalia itself hopes that sanity has returned to the nation.

The Shell-ExxonMobil oil and gas roadmap will enable the conversion of prior agreed concessions into Production Sharing Agreements under the provisions of the new Somali Petroleum Law.

It builds on an agreement signed in Amsterdam on 21 June 2019 which led to the receipt of US$1.7 million from the Shell-Exxon joint venture from historical surface rentals and other incurred obligations on offshore blocks.

In adherence to the Revenue Sharing Agreement, this payment was re-distributed among Somalia’s Member States for independent allocation.

Analysts said the relationship between the states and the Federal government remains challenging.

Somaliland maintains it is an independent state, while Puntland is part of the federal set-up though with its separate policies.

The analysts have added that there was no doubt that the worst was behind Somalia, with piracy under control for the better part of a decade. Actual and attempted attacks by Somali pirates peaked at 237 incidents in 2011.

The International Chamber of Commerce’s International Maritime Bureau, which specializes in fighting crimes against maritime trading, has reported that piracy fell steeply to just a handful of incidents in each of the last six years.

Australian engineering company Worley said it was awarded two master service agreements by French major Total to provide specialised services for the Mozambique LNG export project at Pemba on the northern coast of the southeast African nation.

“Under the MSAs, Worley will provide in-and-out of country services, including engineering, consulting and specialist engineering for delivery of onshore and offshore (subsea) facilities,” said Worley.

“The services will support the development of the new LNG facility,” the company added.

Worley said the work would be under its local Mozambique operational division with support from Worley’s global businesses, including the consultancy subsidiary Advisian. 

Syndey-based Worley has already supported the LNG development, located on the Afungi peninsula in Mozambique's Cabo Delgado province, since natural gas was first discovered there in 2010. 

Analysts said Worley was a highly experienced LNG and natural gas contractor, having played a leading role in the build-out of Australia's liquefaction plants.

“We are pleased to continue providing services to the LNG development and to support one of Africa’s largest projects,” said Andrew Wood, Chief Executive of Worley.

“Through the MSAs, we will help Total and its partners in the Mozambique LNG Project meet the world’s changing energy needs,” added Wood.

The French company has already said it planned to expand its Mozambique venture with up to two additional processing Trains, taking the total up to four Trains.

Total is looking  at studies for Train 3 and Train 4 because of the huge feed-gas resources offshore Mozambique.

Total confirmed in October 2019 that it paid $3.9 billion to close the acquisition of Anadarko Petroleum’s 26.5 percent operated interest in the Mozambique LNG project from Anadarko purchaser Occidental Petroleum.

Total had previously reached a binding agreement with Occidental to buy Anadarko’s assets in Africa, including Mozambique, Algeria, Ghana and South Africa.

Patrick Pouyanné, Chairman and Chief Executive of Total, has said that Mozambique LNG was a one-of-a-kind asset that perfectly fitted with the company strategy.

Total plans to work on the strong foundations established by the previous operator Anadarko and its partners.

The project includes the development of the Golfinho and Atum fields located within offshore Area 1 of the Rovuma Basin. 

The plant site has already been cleared near the coastal town of Pemba.

The Rovuma Area 1 contains more than 60 trillion cubic feet of gas resources of which 36 Tcf could be developed for a four-Train plant.

The Area 1 shareholder line-up is now as follows: Total operates Mozambique LNG with a 26.5 percent participating interest alongside Mozambican state-owned energy company ENH (15 percent). 

Japan’s Mitsui owns 20 percent, India’s ONGC Videsh, Bharat  PetroResources and Beas Rovuma Energy each hold 10 percent and Thailand’s PTTEP 8.5 percent.

The Total-led venture is Mozambique’s first onshore LNG plant.

Italian energy company Eni is leading a project for the Coral South floating LNG project from Area 4 resources in the Rovuma Basin. 

It is also planning an onshore venture with ExxonMobil and other stakeholders.

The final investment decision on the Mozambique LNG project was announced by Anadarko in June 2019 and the venture is expected to come into production by the start of 2025.

French energy major Total said second-quarter adjusted net income dropped 19 percent to $2.88 billion from $3.55Bln in the same three months of 2018 in results offset by a more than doubling of liquefied natural gas sales and the acquisition of Mozambique LNG assets from Occidental Petroleum.

Total said second-quarter LNG sales more than doubled to 8.5 million tonnes from 3.9MT in the same three months a year ago.

First-half LNG sales came to 16.2MT versus 7.7MT in the first half of 2018.

The company said that while gas prices fell sharply there was an increase in LNG sales.

“Compared to the second quarter of 2018, operating cash flow before working capital changes increased by 77 percent, driven by a doubling of LNG sales,” said Total.

“Total LNG sales more than doubled compared to last year for the second quarter and first half 2019 thanks to the start-up of Yamal LNG Trains 2 and 3 in Russia, Ichthys LNG in Australia, the first Cameron LNG Train in the US and the acquisition of the portfolio of LNG contracts from Engie in 2018,” explained Total.

Total also stated that its signing of an agreement with Occidental Petroleum of the US to acquire Anadarko Petroleum’s assets in Africa, including its LNG stake in Mozambique, would capitalize on the French company’s strengths.

“In Mozambique, it leverages its expertise in LNG, in Ghana, the deep offshore and, in Algeria, its historic presence,” said Chairman and Chief Executive Patrick Pouyanné.

“The Group continues to grow in LNG with the signing of a sales contract with the Chinese company Guanghui, the takeover of Toshiba’s LNG portfolio (Freeport LNG) and the start-up of Cameron LNG,” added Pouyanné.

“This strategy is complemented by the divestments such as the recent sale of mature assets in the UK North Sea,” stated the CEO.