Royal Dutch Shell PLC (RDSB.LN) is pitching its floating liquefied natural gas technology direct to the government of Mozambique as way to gain entry to one of the world's hottest energy plays, after the oil major failed to buy its way into huge gas discoveries offshore East Africa.
Royal Dutch Shell PLC (RDSB.LN) is pitching its floating liquefied
natural gas technology direct to the government of Mozambique as way to gain
entry to one of the world's hottest energy plays, after the oil major failed to
buy its way into huge gas discoveries offshore East Africa.
The presentation of the technology during a visit by
Mozambique
's
president, Emilio Guebuza, to the home of the
U.K.
oil
industry, suggested Shell is looking for ways to bypass the companies which
have made the gas discoveries--U.S.-based Anadarko Petroleum Corp. (APC) and
Italy
's Eni
SpA (E)--and deal directly with the government.
"We are the leading independent company in the world of integrated gas
today," Bruce Steenson, Shell Australia's vice president of technical and
the Prelude project, told an audience of government officials from
Mozambique
in
Aberdeen
,
Scotland
. "Hopefully
we can use that capability to forge some long-lasting partnerships with
Mozambique
."
Mozambique
could
eventually become one of
Africa
's
biggest energy exporters, following the discovery of giant natural gas fields
in the deep waters off its northeast coast. The discoveries are ideally placed
to serve Asian export markets.
Shell tried to gain a foothold in the region last year by bidding $1.8 billion
for Anadarko's junior partner, U.K.-listed Cove Energy PLC (CNVGY). However,
Shell was outbid by
Thailand
's PTT
Exploration & Production PLC (PTTEP.TH).
In May, Shell revealed it has been in talks with Anadarko about acquiring a
stake in its
Mozambique
fields, but had pulled back because the asking price was too high.
Mr. Guebuza said Thursday that he wants
Mozambique
's
first LNG exports to start shipping in 2018, an ambitious deadline in a country
that has no established oil and gas industry and limited infrastructure.
Shell's floating LNG vessels will produce, liquefy and transfer gas to tankers
for export, removing the need for a costly and complex onshore terminal. The
technology is being used on a project in
Australia
with
a similar five-year development schedule and could be one solution for
Mozambique
, said
Mr. Steenson.
Shell took the decision to deploy a $10 billion floating LNG vessel on
Australia
's
Prelude field in 2011 and it is due to start operating late in 2016 or early in
2017, said Mr. Steenson. The Prelude vessel, the first of its kind in the
world, will produce around 5.3 million metric tons of LNG and condensate a
year, he said.
At present, the rights to export LNG from
Mozambique
rest
with the firms operating the concessions where most of the 108 trillion cubic
feet of natural gas have been found, said Arsenio Mabote, chairman of the
Mozambique
's
state-controlled National Petroleum Institute Thursday. Talks with the
companies on how best to proceed with the development should conclude within in
the next few months, he said.
Anadarko and Eni have said that they want to develop an LNG plant together,
although some industry analysts say a project of the scale envisaged by the
Mozambique
government would likely require additional investment from larger companies
with better-established LNG shipping businesses.
The government of
Mozambique
expects it will cost at least $40 billion to develop its natural gas
infrastructure. This includes facilities capable of exporting 20 million tons
of LNG annually, and a local distribution hub that will service its domestic
energy needs and those of its near neighbors.
Calls to Anadarko and Eni for comment weren't immediately answered. Speaking
last October, Eni's Head of Exploration and Production Claudio Descalzi said
Shell, "could be a wonderful partner."
In a separate announcement Friday, Eni said it has completed a deal to sell 20%
of its
Mozambique
gas
discoveries to China National Petroleum Corp. for $4.21 billion.
Shell could make its technology available for use in
Mozambique
without having to become an equity partner in the gas discoveries, Mr. Steenson
said.
"In Woodside's Pluto venture, we don't participate as an equity partner,
but we provided technical services to Woodside to enable them to design and
build the facility," said Mr. Steenson, referring to an Australian LNG
project. He also highlighted similar partnerships with Chevron Corp. (CVX) at
the Gorgon and Wheatstone LNG projects, also in
Australia
.
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