Royal Dutch Shell PLC (RDSA, RDSB) is pitching its floating liquefied
natural gas technology direct to the government of Mozambique as a 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 off the shore of
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
that have made the gas discoveries--U.S.-based Anadarko Petroleum Corp.
(APC) and Italy's Eni SpA (E, ENI.MI)--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 eventually could 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 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 Mr. Steenson said it
could be one solution for Mozambique.
Shell took the decision to deploy a floating LNG vessel on
Australia's Prelude field in 2011, and it is due to start operating late
in 2016 or early 2017, Mr. Steenson said. The Prelude vessel will be
the first of its kind in the world and analysts estimate it will cost
between $10 billion-$12 billion to build. It 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 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 likely would 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.
Anadarko said Friday that its preference was to build an
onshore LNG facility as planned. "We've chosen to utilize a more proven
development for our massive natural gas discoveries offshore
Mozambique," spokesman John Christiansen said.
"Constructing an onshore LNG park provides an advantage over
floating LNG in that will greatly enhance local content, providing
direct and indirect employment for the people of Mozambique," Anadarko's
Mr. Christiansen said.
However, Mr. Christiansen said that floating LNG could be a
viable option for some of the smaller, separate fields that Anadarko has
discovered.
An Eni spokesman declined to comment.
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 has, in some instances around the world, made its
technology available for use developing other firm's gas discoveries
without having to become an equity partner, 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.