In recent years, East Africa has seen an increase in oil and gas finds. From Uganda to Mozambique,but each come with their own set of challenges.
Some of the most prolific projects announced are in Mozambique where mega consortia have formed and are about to develop two major Liquified Natural Gas (LNG) facilities, requiring US $40 – $50 billion in investment.
Mozambique LNG plant
This mega LNG facility, which was originally led by Anadarko and whose stake was acquired by Total in 2019, has a budget of close to $20 billion. The plant is located near the town of Palma in the north-east of Mozambique, just south of the Tanzania border. The Financial Investment Decision (FID) was reached in 2019 with major design, engineering and procurement activities underway.
The Rovuma LNG plant – Mozambique
ExxonMobil and ENI has taken the lead development role in this mega project. The new facility is located next to the Mozambique LNG plant in the northern parts of the country. With a projected investment of more than $30 billion, this project is a major driver for economic growth and development in one of Africa’s poorest regions. This project was expected to reach financial close during 2020. A recent announcement by ExxonMobil indicated that the FID could be pushed back to a later date.
Both these facilities are located in the northern parts of Mozambique, straddling the same gas basin and providing some synergies to develop joint infrastructure to improve the overall project finances.
Oil in Uganda
Uganda has made discoveries in Lake Albert with 1.4 to 1.7 billion barrels of recoverable oil. The national oil company is currently exploring partnerships to develop these upstream deposits. With Uganda being a landlocked country, it faces the challenge of processing oil for local consumption as the cost of export would have a negative impact on the project’s return on investment. This challenges the project economics as the domestic market can’t afford rates paid by other global export markets.
Tanzania LNG facility
The president of Tanzania has also announced the country’s interest to proceed with a large-scale LNG facility located in the southern part of the country, close to the Mozambique border. Shell was leading this development but has experienced frequent delays in moving forward with a final investment decision (FID). A critical part of reaching the FID is finding credible offtake agreements at competitive market rates.
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