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High hopes for Mozambique LNG with third discovery

The country hopes to become the first east African country to produce LNG

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MOZAMBIQUE is on course to become east Africa's first liquefied natural gas (LNG) producer, following a third large gas discovery in late-November. Anadarko, operator for deep-water Area 1, in the northern offshore, said its Windjammer, Barquentine and Lagosta finds – all made in 2010 – "exceed the resource size-threshold necessary to support an LNG development".

The latest well, Lagosta, drilled about 25 km south of the two previous discoveries, found 168 metres of gas zones in multiple sands, Anadarko said. Drilling was continuing at press-time to test a deeper zone. At Barquentine, the firm found 127 metres of gas zones while Windjammer showed 146 metres, with the lower zones of the two finds apparently being connected. Water-depths are 1,548 metres at Lagosta, 1,585 metres at Barquentine and 1,464 metres at Windjammer (PE 10/11 p34).

Although none of the discoveries has been tested – at least one test is included in the 2011 schedule for the Belford Dolphin drillship, which drilled all three wells – Anadarko said it will start studies on commercialisation options. LNG exports could provide "tremendous economic value for the people of Mozambique, the government and the partnership", the company said. The discoveries lie about 40 km offshore, making a subsea-to-beach tie-back development a possibility.

Optimism for Mozambique's deep water is running high because it is virtually unexplored – Windjammer was the country's first deep-water well – and because seismic surveys over Area 1 have shown numerous leads, with the discoveries validating the seismic interpretation. There are also hopes of oil, following shows with the Ironclad well in the southern part of Area 1. Anadarko will move the Belford Dolphin to the Tubarão structure, southwest of Lagosta, for the next well. The company has the drilling unit under contract until first-quarter 2013 and says it will keep it in the basin for the foreseeable future.

Interests in Area 1 are Anadarko, 36.5%, Mitsui, 20.0%, BPRL Ventures (part of India's Bharat Petroleum), 10.0%, Videocon (also Indian), 10.0%, the UK's Cove Energy, 8.5%, and Mozambique's state-owned Empresa Nacional de Hidrocarbonetos, 15.0% (carried through exploration). Wentworth Resources, described as an east Africa-focused exploration and production company with a listing on the Oslo stock exchange, says that, through an exchange of interests with Anadarko, it has an overriding royalty interest of 0.42% in production from Area 1.

Anadarko's successes raise prospects for other licences nearby. Area 4, immediately east of Area 1, is held by Eni, while Areas 2 and 5, to the south, are both held by Statoil. Areas 3 and 6, south of Statoil's, are held by Petronas. The onshore is also seeing work, but in October the government was only able to award one area, out of seven onshore licences on offer, under its fourth licensing round. Norway's DNO signed-up for the Lower Zambezi graben block.

Mozambique is already a gas producer: since early 2004, gas from the Sasol-operated onshore Pande and Temane fields has been piped to Secunda, South Africa. The fields and the 865 km pipeline are being upgraded to raise capacity from 3.1bn cubic metres a year (cm/y) to 4.7bn cm/y, with work due for completion in 2011.

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