Anadarko Petroleum Corp. and its partners late Tuesday pulled the switch to sanction their massive Mozambique natural gas export project.

The estimated $20 billion project would be Mozambique's first onshore liquefied natural gas (LNG) development, initially consisting of two trains with total nameplate capacity of 12.88 million ton/year (mmty).

Co-venturers in Mozambique's Offshore Area 1, which would supply the gas, announced the final investment decision (FID) Tuesday for the Anadarko-led Area 1 project at an event in Maputo, Mozambique.

“This official declaration of FID confirms the Area 1 Plan of Development is now effective with notice provided to the Government of Mozambique that all conditions precedent have been fulfilled, and the project can now advance to the construction phase,” Anadarko said.

"This is a historic day for the people of Mozambique," said President Filipe Nyusi. "Today's sanctioning of the Anadarko-led Area 1 Mozambique LNG project solidifies a path toward the creation of thousands of jobs for our people, significant economic growth for our nation, and the potential to be one of the world's largest providers of cleaner energy for decades to come.

“It is truly one of the most important and transformational projects in our country's history."

Anadarko CEO Al Walker called it an “exciting day for Mozambique and for our partnership, bringing us a step closer to making Mozambique's first onshore LNG facility a reality...As the world increasingly seeks cleaner forms of energy, the...project is ideally located to meet growing demand, particularly in expanding Asian and European markets.”

Anadarko Moçambique Área 1 Lda operates Offshore Area 1 with a 26.5% working interest. Co-venturers include Mozambique’s state-owned ENH Rovuma Área Um SA (15%), Mitsui E&P Mozambique Area1 Ltd. (20%), ONGC Videsh Ltd. (10%), Beas Rovuma Energy Mozambique Ltd. (10%), BPRL Ventures Mozambique BV (10%), and PTTEP Mozambique Area 1 Ltd. (8.5%).

“This is among the most significant projects that our company has ever undertaken, and that’s true not just because of the sheer size of the effort, but also because of its obvious transformational value both to this country and to the world,” said Mitsui CEO Tatsuo Yasunaga. “It remains a great source of pride for our company and our employees of the role we’ve helped to play in making this announcement possible. Now it’s time to execute, and I believe this partnership is well positioned to do just that.”

The project supports development of the Golfinho/Atum fields within Offshore Area 1.

To date, the partners have successfully secured in aggregate 11.1 mmty of long-term LNG sales, representing 86% of nameplate capacity with key buyers in Asia and in Europe. Additionally, a domestic gas component is part of the plan to provide for in-country consumption and help fuel future economic development that initially would provide 100 MMcf/d.

The project participants have committed to working collaboratively with local and national governments to ensure that the safe development of the resources benefits the people of Mozambique through encouraging foreign investment and strengthening social institutions.

Area 1 now has about 5,000 workers on-site progressing works associated with the construction of a resettlement village, camp expansion, airstrip, and Palma-Afungi Highway, according to Anadarko.

The partners expect to soon finalize financing and issue notices to proceed under previously executed engineering, construction, procurement and installation contracts.

The Mozambique government also designated the Anadarko-led project as "First Mover," which means Area 1 operators are responsible for constructing support facilities to be shared between Area 1 and Area 4 projects, including a materials offloading facility and LNG marine terminal.

That First Mover status affects the next LNG export project likely to be sanctioned by ExxonMobil Corp. and Eni SpA, which are leading the Area 4 joint venture (JV), Mozambique Rovuma Venture SpA. The Rovuma JV, designed to produce more than 15 mmty, would produce, liquefy and market gas from three reservoirs in the Area 4 offshore block; two reservoirs straddle the boundary with neighboring Area 1.

China National Petroleum Corp. holds a 70% stake in the related Area 4 exploration and production concession contract, with Portugal’s Galp Group, Korea Gas Corp. and Mozambique’s Empresa Nacional de Hidrocarbonetos EP each holding a 10% interest.

Eni and ExxonMobil in 2017 also sanctioned Mozambique’s offshore Coral South floating LNG project in Area 4 with capacity of up to 3.4 mmty.

The Anadarko-led project and the ExxonMobil-Eni JV have been working toward FIDs for more than four years, according to Wood Mackenzie’s Jon Lawrence of the sub-Saharan Africa upstream team.

“With strong LNG demand growth out of Asia, now is Mozambique’s time,” Lawrence said. “At $20 billion, today’s FID is the largest sanction ever in sub-Saharan Africa oil and gas...

“We believe that, from the early 2030s, state revenue from Mozambique LNG alone will reach $3 billion/year, single-handedly doubling today’s revenue,” per calculations by the International Monetary Fund and the World Bank.

Wood Mackenzie expects the two Mozambique LNG projects to be the second and third most valuable oil and gas sanctions taken this year, after Arctic LNG-2 in Russia. 

“As first development mover, the Anadarko joint venture will lead construction of shared aspects of the two onshore LNG projects,” according to Lawrence.

Wood Mackenzie’s Frank Harris, head of LNG consulting, said, “Flexible commercial arrangements, including an innovative co-purchase agreement with Tokyo Gas and Centrica, have been instrumental in securing the project a roster of high-quality customers in a crowded LNG market.”

While Anadarko now leads the Mozambique consortium, it is expected eventually to be led by France’s Total SA under an $8.8 billion agreement with Occidental Petroleum Corp., which is buying Anadarko.