Italian energy company Eni signed an $8 billion deal on Thursday, June 1st, 2017 to develop a gas field off the coast of Mozambique.
The country’s President Filipe Nyusi and Eni Chief Executive Officer Claudio Descalzi among other dignitaries, attended a ceremony in the capital Maputo, to formally approve the Coral South liquefied natural gas project.
Once built, the floating LNG plant, with a capacity of about 3.4 million tons a year and will draw gas from the Rovuma Basin where Eni made its first major Mozambique find in 2011.
“Mozambicans have just witnessed the launch of a structuring project for our economy that will surely have a positive impact on our lives, said Mozambican president, Filipe Nyusi.
“Coral South, just Coral South because there’s also Coral North, is going to give overall to the community, the contribution to the government, as the government take, about 16 billion dollars,” said Eni CEO, Claudio Descalzi
The project draw gas from the Rovuma Basin and LNG exports are expected to start in 2022.
Analysts say this is significant because, at a time when Mozambique going through a financial crisis, it shows that there are investors that still have confidence in the country, and it also shows that its gas reserves are going to get developed. At the moment around the world because of the low oil prices, there are a lot of oil and gas assets that aren’t going into production.
Eni said project finance would fund 60 percent of the cost of building the floating LNG facility while the financing agreement has been subscribed by 15 major international banks and guaranteed by 5 export credit agencies.
It will be the first in Africa and only the third globally.
The Coral field is located within Area 4 and contains approximately 450 billion cubic meters (16 TCF) of gas in place.
In October 2016, Eni and its Area 4 partners signed an agreement with BP for the sale of the entire volumes of LNG produced by the Coral South project for a period of over twenty years.