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In a key step towards a final investment decision for Mozambique’s liquefied natural gas (LNG) scheme, the council of ministers in Maputo has approved the plan of development for Eni’s Coral discovery in offshore Area 4. The approval relates to the first phase, which will develop 5tcf of gas in the discovery, via a 3.4m t/yr floating LNG facility. Eni said the plan of development, the first to be approved in the Rovuma Basin, foresees the drilling and completion of six subsea wells in water depths of 2,000 metres some 80km offshore.

Sasol said on 1 February it had obtained approval from Mozambique’s council of ministers for a new field development plan for an area next to its producing Pande and Temane fields. The first phase of the production-sharing agreement licence area development proposes an integrated oil, liquefied petroleum gas and gas project adjacent to Sasol’s existing petroleum production agreement (PPA) area. Sasol declared commerciality on the Inhassoro G6 and G10 oil, and Temane G8 and Temane East gas reservoirs in 2013.

Electricidade de Moçambique (EDM) has announced that it has secured a loan of €29m from Germany’s KfW. The financing is made up of €20m for construction of a power interconnector with Malawi, and €9m for EDM’s short-term transmission investment plan. A first feasibility study for the interconnector was carried out in 1996 by Germany’s Lahmeyer International. It recommended the construction of a 210km, 220kV transmission line to transfer 200MW between the Matambo substation in Mozambique and the Phombeya substation near Blantyre in Malawi, with a total cost of $32m.

A lot hangs on the ability of President Filipe Nyusi’s government and its international oil company (IOC) partners to deliver a world-scale liquefied natural gas (LNG) export industry and substantial domestic and regional electricity supply during a period defined by growing pressure on the national budget and balance of payments. The global economic slowdown has led to downward revisions in demand forecasts in Japan and other Asian markets that are expected to import Rovuma Basin gas from 2021-22.

British Virgin Islands-registered Ncondezi Energy Ltd has signed a joint development agreement with China’s Shanghai Electric Power Company Ltd (SEP) for the 300MW Ncondezi coal power project in Tete province. SEP will invest up to $25.5m to cover development costs to financial close in return for a 60% equity stake in the project’s special purpose vehicle Ncondezi Power Company. Ncondezi Energy will retain the remaining 40%.

Gigawatt Mozambique announced the commissioning of its 120.9MW gas power plant at Ressano Garcia on 13 December. The plant comprises 13 9.3MW B35:40 engines – 20-cylinder Rolls-Royce engines coupled with ABB generators – using gas supplied from Sasol’s fields through a 20-year gas supply agreement signed with Mozambican transport and distribution company Matola Gas Company.

Anadarko Petroleum Corporation, Eni and their partners have signed a unitisation and unit operating agreement (UUOA) for the development of massive natural gas resources that straddle Anadarko-operated Area 1 and Eni’s Area 4. Under the terms of the UUOA and previously announced Decree Law, the Prosperidade and Mamba reservoirs will be developed in a separate but co-ordinated manner by the two operators until 24tcf of natural gas reserves, 12tcf from each area, have been developed. All subsequent development of the unit will be pursued jointly by the Area 1 and Area 4 concessionaires through a joint-venture operator (50:50 Anadarko and Eni).

The Mozambican government has issued a general procurement notice for a project to support reforms to its renewable energy policy and regulatory framework. The government has received a grant from the Sustainable Energy Fund for Africa, which is managed by the African Development Bank. The project seeks to put in place a feed-in tariff regime and a mini-grid policy and regulatory framework. Work to be tendered includes the production of standard power purchase agreements for renewable energy projects smaller than 5MW and medium-sized projects of 10MW; guidelines for connection to the distribution network of small renewables projects; and guidelines for renewables investors.

The National Petroleum Institute (INP) has awarded five blocks from the fifth licensing round, with ExxonMobil taking a commanding position in partnership with Russia’s Rosneft. INP resource assessment director José Branquinho told Africa Upstream the round had attracted total spending commitments of $691m and pledges of eight deep-water wells and two onshore wells. He said the INP was now planning a sixth round for 2017, and was working with service companies to acquire data. Agreement had been reached with Schlumberger for a multi-client 3D survey in the Angoche area, and other multi-client proposals were under evaluation.

Engen has opened a new fuel supply terminal at Beira to increase supply capacity to Southern Africa. The 24,000m³ terminal will supply petrol, diesel and lubricants to the main hubs in Mozambique, and to other countries in Southern Africa where Engen operates. An official launch was held on 4 September. “We’ve tested railway capabilities from Beira to Bulawayo in Zimbabwe and to Francistown in Botswana, which was very successful. In essence, this means that we can take some pressure off of our Durban refinery and supply Botswana and Zimbabwe directly from our new depot,” said Engen International Business Division general manager Drikus Kotze.

The European Investment Bank (EIB) is appraising a €33m ($36m) loan for Electricidade de Moçambique (EDM), to support an €87m programme of short-term priority measures to improve supply. The project is co-financed by Germany’s KfW under the Mutual Reliance Initiative, a joint co-operation framework established by KfW, the EIB and Agence Française de Développement. According to an analysis of the electricity sector published in February by the US Agency for International Development, a government focus on expanding the grid has “left the country with a critically under-maintained legacy network with scant backup provisions and a high degree of reliance on a single energy source, namely hydro power.

The National Petroleum Institute (INP) has received seven operator applications for blocks offered in Mozambique’s fifth licensing round, including companies already operating in the country such as Sasol and Eni, as well as newcomers like ExxonMobil and Delonex. The round, which offered 15 areas, was launched on 23 October 2014 and closed on 30 July. Onshore block PT5-B surrounding the Pande gas field received a bid from Shoreline Canoverseas Petroleum Development as operator, with Bluegreen Investments of the US and local consultancy Indico Dourado as partners. Shoreline Canoverseas is a partnership of Nigeria’s Shoreline Energy International and Canadian Overseas Petroleum.

Rolls-Royce Power Systems has signed a 15-year long-term service agreement with the TSK joint venture company that will operate and maintain Gigawatt Mozambique’s new 100MW power plant at Ressano Garcia. In June 2014, Rolls-Royce and Spain’s TSK signed a contract to deliver 13 gas-driven 20 cylinder B35:40 generating sets for the power plant, which is being built under an engineering, procurement and construction contract for Gigawatt Mozambique. Rolls-Royce subsidiary Bergen Engines delivered the generating sets earlier this year, and Rolls-Royce is supplying additional engine accessories and support including technical assistance with the construction of the power plant.

Australia’s Global Petroleum has opted to withdraw from the Juan de Nova Est permit in the Mozambique Channel due to a lack of progress on an application to the French authorities for an extension. Global applied for an extension of the permit to the second phase in August 2013. “Given the lack of progress in the two years since then, the fact that there is no visibility as to when a formal decision might be forthcoming from the French authorities, as well as Global’s relative technical ranking of Juan de Nova compared to its other interests and opportunities, the board has taken the decision to withdraw from the application,” the company said.

On a wave of optimism about its offshore Rovuma Basin reserves, Mozambique has emerged as a poster boy for the ‘Africa rising’ agenda. With at least 100tcf of conventional gas reserves – and potentially more than double that amount, according to a range of project sources – this global-scale resource should drive the emergence of a liquefied natural gas (LNG) export industry and substantial domestic and regional electricity supply in the next decade. Mozambique enthusiasts add that the country enjoys several other advantages, including proximity to markets and relatively streamlined decision-making (especially when compared to its potential rival for LNG export markets, neighbouring Tanzania).