Mozambique Gas Will be Very Competitive Due to Low Extraction Cost, Says Eni

LNG produced in Mozambique will be very competitive because of low extraction cost of natural gas in the country, Eni’s Chief Executive Officer Claudio Descalzi said on Wednesday, Reuters reported.

Eni's LNG facilities would become operational in Mozambique in 2020, Descalzi said speaking at IHS CERAWeek in Houston.

“Mozambique is good because the upstream side is not very expensive,” Reuters quoted him as saying. “It is fast and cheap, so it can be very competitive in the market.”

In its 2014 annual report published earlier this month, the Italian firm said it plans to make final investment decision regarding the Coral FLNG project in Mozambique during the second of this year. 

“In Mozambique, where Eni has made the greatest discovery in its exploration history with a mineral potential of about 2,500 billion cubic meters of gas in place, we plan to finalize gas contracts and obtain the necessary production licences, in order to make a final investment decision for the project Coral floating LNG in the second half of 2015,” Eni said in the annual report.

The Coral project scheme comprises construction of a floating unit for the treatment, liquefaction and storage of natural gas (Floating LNG - FLNG) fed by subsea wells. The development plan was formally submitted to the local authorities at the end of 2014.

The award of the relevant EPCIC contracts for the construction, installation and commissioning of the floating unit is expected by the end of 2015 and production start-up is expected for the end of 2019, Eni said.

As part of the Mamba development plan, the first stage would involve construction and commissioning of two onshore LNG trains and the drilling of 16 subsea wells.

Eni expects to make the FID regarding the Mamba project in 2016-2017.