Anadarko planning to sell Mozambican LNG to Japan

anadarkopetroleumcorporation29 June 2015, Maputo — The US company Anadarko Petroleum is in talks with a newly formed Japanese joint-venture vehicle Jera, which is set to become the world’s biggest buyer of liquefied natural gas (LNG), to sell long-term supplies from its planned LNG factory in the northern Mozambican province of Cabo Delgado, according to a Friday report carried by the Reuters news agency.

Anadarko is the operator for the offshore gas fields in Area One of the Rovuma Basin, off the Cabo Delgado coast. Area One will provide the gas for an estimated 10 million tonnes a year of LNG to be exported by the Anadarko factory.

An optimistic projection is that the plant, to be built on the Afungi Peninsula, in Palma district, will be up and running by 2018 or 2019. The Reuters piece, however, suggests that LNG exports will not start until 2021.

Jera, Reuters says, is a joint venture between Tokyo Electric Power Co (Tepco) and Chubu Electric, Japan’s biggest and third-biggest utilities, set up in April with an aim to become the cheapest LNG buyer in East Asia.

Sources in the industry said that Anadarko and Jera are in talks over a long-term gas import deal. A Jera spokesman said the venture is in talks with various firms on new supplies but could not give details on individual projects due to confidentiality agreements.

“Anadarko are in talks with Jera to discuss potential Mozambique sales,” one of the sources said.

Reuters comments that “the move shows how Jera’s bulk purchasing power could be a swing factor in decisions on LNG projects that require huge investment and large long-term contracts to ensure viability”.

Last year Anadarko had allotted two-thirds of the capacity of the planned 10 million tonnes a year from the Palma LNG project, but needed still more before taking a final investment decision, which is still pending.

Anadarko spokesman John Christiansen said the project has more than eight million tonnes a year LNG signed in non-binding deals.

“We are progressing to long-term SPAs (sales and purchase agreements) with multiple customers in Asian markets, and we continue to make good progress with our marketing efforts,” Christiansen said.

Jera already handles all new long-term fuel purchases for Tepco and Chubu. From next year it will also handle all existing LNG supply contracts and purchases, amounting to 40 million tonnes a year.

Reuters’ industry sources also said that Anadarko last year signed a non-binding agreement with Japanese utility Toho Gas for 0.3 million tonnes a year of Rovuma Basin LNG.

A Toho Gas spokesman said Mozambique was a strong candidate for new supplies and is one of the projects it is talking to, but declined to say whether it had signed a non-binding deal, citing confidentiality.

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