Speaking at the Flame Conference in Amsterdam, Anadarko’s Vice President of LNG Marketing and Shipping, Andrew Seck, reassured attendees that the company is still on track to meet its previously announced FID date of June 18th this year.
Anadarko has exceeded its target of achieving two thirds debt equity coverage, Seck said, and now has supply agreements covering 100% of its production capacity. All that remains before the company can take FID is to “dot a few t’s and cross a few i’s,” he told the conference.
The previous few weeks’ uncertainty around the sale of Anadarko’s assets has not affected investor confidence, he said. Chevron, who had been courting Anadarko for almost two years, were outmanoeuvred by an unanticipated bid from the Occidental Petroleum Corporation, who clinched the deal on May 5th.
Occidental have negotiated the sale of Anadarko’s African assets – including Mozambique LNG – to French major Total, whose well-developed LNG portfolio places it in an excellent position to head up the project.
“The story has been quite a rollercoaster over the last month,” Seck said. But the switch in buyers did not unduly worry the project’s backers, as both Chevron and Total are “big industry players” with experience of high value projects.
Delivering a low risk proposition to financiers was central to Anadarko’s choice of offtake structure with Mozambique LNG. Eschewing mixed contract durations and novel financing arrangements, the company have instead opted for a traditional model based on long-term SPAs – an approach which may still be necessary to manage risk for suppliers on expensive greenfield projects.
“Ultimately we had a proposition that appealed to the buyers, and we managed to convince them that our project should be one of the first ones to come online,” Seck explained.
Anadarko also opted to retain oil-indexation for most of its SPAs, Seck said, as financial institutions still view it as the most secure pricing arrangement on offer.
The Mozambique LNG project FID is expected to be followed by the approval of ExxonMobil’s Rovuma LNG project, which will also source feedgas from the 120 tcf Rovuma Basin.
Development of both projects could see Mozambique play an influential role in global LNG markets in the years to come. Mozambique LNG “is by far one of the most exciting LNG assets out there, that is going to have massive implications for how the market develops,” Seck said.
“Mozambique in my opinion has the potential to be one of the top five LNG producers in the world.”