Mozambique offers “advantaged barrels” in exploration round

Mozambique’s sixth bid round is under way and potential bidders have until the end of February to pre-qualify.

Mozambique held a virtual bid round last week organised by Frontier Energy, with a number of high-ranking Instituto Nacional de Petroleo (INP) officials taking the time to spell out expectations for the offering.

The East African state sees gas as playing a critical role in the energy transition, INP head Carlos Zacarias said during the virtual roadshow.

He linked exploration work in Mozambique to climate change mitigation and the drive to use cleaner sources of energy in order to comply with international commitments.

“The discovery of huge natural gas resources will facilitate a smooth transition,” Zacarias said. He also noted Mozambique’s potential for hydrogen and other forms of energy. Work in Mozambique has discovered around 125 trillion cubic feet of gas.

The licence round will run until the end of August. INP expects to announce the results at the end of November.

CGG Senior Geoscientist Javier Martin, speaking at the roadshow, said the question was “not whether there are hydrocarbons. It’s about where we drill for the next big discovery.”

Local growth

Mozambique’s opportunities in the north have been demonstrated over the last 10 years. Anadarko Petroleum and Eni made the basin-opening discoveries that have now spurred major LNG export plans.

TotalEnergies is developing the Mozambique LNG project, which is currently under force majeure as a result of a terrorist attack last year. The French company’s head Patrick Pouyanne visited Maputo this month and has talked about the need for sustainable security to be in place to allow work to restart. That said, he suggested it may come this year.

Also due this year is the start up of operations at Eni’s Coral Sul floating LNG (FLNG) project. Insulated from onshore problems, the vessel is now in country. It should begin producing in the second half of the year.

Standard Bank Mozambique’s Fáusio Mussá predicted that security would continue improving this year in the northern Cabo Delgado Province. This should help drive growth in Mozambique, with GDP rising 3.1% this year and 3.4% next year.

Eyeing the prize

Developing the country’s energy resources could help provide more sustained growth, Mussá said. This would “position Mozambique as a key energy supplier to the region”, he continued. South Africa has identified Mozambique as playing an important part in its future shift to gas.

Wood Mackenzie’s Gail Anderson that the majors were “doing more with less”. Exploration is still ongoing, she said, but with more rigour and efficiency.

“Mozambique and other countries in the area are attracting majors, as frontier basins with the potential for giant discoveries,” she said, noting good fiscal terms.

“Giant deepwater discoveries offer advantaged barrels. That is low unit cost, making them resilient to low price risk and can be developed with advanced technologies, which makes the emissions much lower than a mature deepwater field. That’s why exploration has an important part to play in the energy transition.”

SOURCE: Energy Voice(Orginally published on 9th February 2022)

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