LNG

ExxonMobil confirmed it was delaying a final investment decision for the Rovuma liquefied natural gas project in Mozambique, probably into 2021 at the earliest, but US Gulf Coast spending plans remain on track.

The FID had been expected for later in 2020, though the US major said it was continuing to actively work with its partners and the government to optimize development plans.

The Coral LNG development continues offshore Mozambique continues as planned.

The Mozambique update came in a statement from ExxonMobil saying it was reducing its 2020 capital spending by 30 percent and lowering cash operating expenses by 15 percent in response to low commodity prices resulting from oversupply and demand weakness from the Covid-19 pandemic.

“Capital investments for 2020 are now expected to be about $23 billion, down from the previously announced $33Bln,” said ExxonMobil.

The 15 percent decrease in cash operating expenses is driven by deliberate actions to increase efficiencies and reduce costs, and includes expected lower energy costs.

“Despite the reductions, ExxonMobil expects to meet its projected investment of $20Bln on US Gulf Coast manufacturing facilities made in its 2017 'Growing the Gulf' initiative,” said the US major. This spending is mainly on refining and chemical-manufacturing projects.

The company also expects to reach its proposed US investment of $50 billion over five years announced in 2018,” it added.

ExxonMobil said in October 2019 that it planned to invest more than $500M in the initial construction phase of its Rovuma project in Mozambique as part of the Area 4 resources development with its partners, including Italian energy company Eni and China National Petroleum Corp.

“After a thorough evaluation of the impacts of the pandemic and market conditions, we have worked closely with business partners to plan and execute capital adjustments that preserve long-term value, maximize cost efficiency, and put us in the strongest position when market conditions improve,” said Darren Woods, Chairman and Chief Executive of ExxonMobi.

“The long-term fundamentals that underpin the company’s business plans have not changed - population and energy demand will grow, and the economy will rebound,” Woods added.

Exxon’s Rovuma Basin stake, jointly held with Italian firm Eni, will produce LNG from three feed-gas reservoirs located in the Area 4 block offshore Mozambique’s northern coast.

ExxonMobil is the lead company for the Mamba gas fields and LNG project development and costs are estimated at around $30Bln.

Area 4's consortium is formed by Mozambique Rovuma Ventures, comprising ExxonMobil with 25 percent, Eni with 25 percent and China’s CNPC, also known as PetroChina, with 20 percent.

The remaining 30 percent of shares in that licence are held in parcels of 10 percent by South Korean utility and energy company Korea Gas Corp., Galp Energia of Portugal and Mozambique’s state energy compny ENH.

A separate project for Area 4 resources is the Coral floating LNG joint venture with capacity of around 3.4 MTPA already under construction and scheduled to come on stream in 2022.

ExxonMobil will lead the development of liquefaction and LNG operations on behalf of the Area 4 joint venture, while Eni will be in charge of the construction and bringing on stream of the upstream facilities.

Eni had completed its sale of a 25 percent indirect interest in the Area 4 licence block in the Rovuma Basin to ExxonMobil in November 2017.

The development plan for the first phase of the LNG venture currently specifies the design and construction of two LNG Trains, which will each produce 7.6 MTPA of LNG.