Saipem of Italy to lead group of engineering firms chosen to construct Mozambique LNG plant

Tuesday, 11 June 2019

LNG Journal editor

Anadarko Petroleum, the US company that has agreed to be taken over by Occidental Petroleum and whose liquefied natural gas assets will be sold to French major Total, has awarded the main engineering contract for the onshore Mozambique LNG plant to a consortium of companies from Italy, the US and Japan.

The engineering, procurement and construction contract valued at more than $8 billion is led by Saipem of Italy and its main partner McDermott International of the US, while Chiyoda Corp. of Japan will fill an advisory role.

Proceeding

Anadarko is proceeding with its Mozambique LNG commitments after agreeing to a takeover by Occidental after a bid valued at $55Bln, when Anadarko’s debts are included, was chosen in May 2019 in preference to a rival bid from Chevron Corp.

Occidental has already offset $8.8Bln of its acquisition agreement for Anadarko by agreeing to sell Total its Mozambique LNG stake and its African oil and gas assets.

Anadarko is still operator of the Mozambique project and has a 26.5 percent stake and operatorship of the Area 1 of the offshore Rovuma Basin reserves that underpin the LNG venture.

Other shareholders in the Area 1 licence and LNG project include the Japanese trading house Mitsui & Co. and three Indian companies, Bharat Petro Resources, ONGC Videsh and Oil India Ltd., as well as Thailand’s national energy company PTTEP and the Mozambique state-owned oil and gas firm ENH.

The onshore Mozambique project will have phase one output of almost 12.9 million tonnes per annum of LNG from two liquefaction Trains, as well as all necessary associated infrastructure, storage tanks and export jetty facilities.

Saipem said its portion of the initial EPC contract was worth $6Bln and was subject to a full notice to proceed, expected to be issued after the final investment decision is taken.

“After many years of dedication to this project, we are very happy to announce that we have reached full agreement for the contract,” said Saipem Chief Executive Stefano Cao.

“We congratulate Anadarko and its co-venturers for the achievement and are grateful for the confidence demonstrated towards our joint venture,” added Cao.

“With this project, we will strengthen our presence in East Africa, confirming Saipem’s role among the leaders in the LNG market for the energy transition,” he stated.

McDermott said its initial portion of the EPC contract award is worth approximately $2Bln.

“LNG is helping to shape an entirely new era of energy solutions, and McDermott is playing a significant role in this global shift,” said Tareq Kawash, McDermott’s Senior Vice President for activities outside North America.

“The Area 1 Mozambique LNG project will build on McDermott’s industry-leading experience and demonstrate our ability to deliver comprehensive EPC solutions globally for world-scale LNG developments,” added Samik Mukherjee, McDermott’s Group Senior Vice President for Projects.

Saipem and McDermott said they had established a new office in the Italian city of Milan, where a team from both companies will lead the project management, engineering and procurement in advance of sharing on-site construction management responsibilities.

McDermott said it would perform engineering from both London as well as Gurgaon in India, a technology hub near New Delhi. The third EPC partner, Chiyoda. will only provide advisory services for the joint venture.

Two other LNG projects are planned in Mozambique from another licence consortium. The Area 4 licence for Rovuma Basin resources is held by Italian energy company Eni and partners.

Coral venture

The ventures include the Coral floating LNG joint venture with capacity of around 3.4 MTPA already under construction and scheduled to come on stream in 2022.

The Area 4 onshore Mamba LNG project is also expected to be sanctioned in 2019 and production is scheduled to start in 2024.

The Area 4 consortium is formed by Mozambique Rovuma Ventures, comprising Eni 25 percent, ExxonMobil 25 percent and China National Petroleum Corp. (PetroChina) with 20 percent.