The government of Mozambique has restructured the shareholding and financing of the Liquefied Natural Gas (LNG) project of the Rovuma Offshore Area one.

This new revision of the earlier signed agreement allows the entry of French oil and gas giant, Total, into the shareholding. This was a position formerly held by the United States Company, Anadarko, but when Occidental Petroleum acquired the assets of Anadarko, it sold the African assets to the French giant.

As part of the Final Investment Decision (FID) agreed upon last year, Anadarko and its partners would only take the later stages in the development of the Golphino and Atum gas fields in Area One after 2026.

According to Mineral Resources and Energy’s Max Tonela, the revision “also seeks to create conditions for flexibility in the development of undertakings related to the project.”  He further said, “With the entry of Total, an exercise has been undertaken to optimize the financing. This will allow studies for presenting the second Area One onshore LNG project to take place during the term of office of the present government (i.e. by 2024)”.

“This process to optimize the financing,” he continued, “has also allowed a reduction in interest costs of about $1.1 billion during the construction phase and $700 million during the operational phase. This will allow all the interested parties, including the Mozambican state, to make associated gains.”

He also prognosticated that because of the new provisions, “the amount that the Mozambican state will receive from the project will increase by a billion dollars.”

He further commented on the impact of the pandemic on Offshore Area One and the outbreak of COVID-19 at the Total work camp on the Afungi Pennisula in Cabo Delago. “We are finding ways of mitigation. The engineering work is taking place in a programmed manner. The pandemic has had some impact on questions of procurement, but these can be recovered from, since they do not endanger the overall programme for the project.

“Work is underway to disinfect the camp, and we envisage that it will be declared free of COVID-19 by the end of the month.”

A financial agreement of $15 billion is expected to be signed by Total by next month with about twenty banks. The agreement, when signed, plus the disinfection of the camp will allow for the resumption of the suspended building of the two LNG processing factories to be covered by the project.

Total heads the Area One consortium with a participation of 26.5%. Its partners are the Japanese company Mitsui with a participation of 20%, PTTEP of Thailand with the participation of 8.5%, Mozambique’s National Hydrocarbon Company, ENH with a participation of 15%, and three Indian companies – ONGC Videsh, Beas and Bharat Petro Resources – with a participation of 10%.