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By 2020, Mozambique could become one of the world’s largest suppliers of LNG. The country is expected to join the US and Australia among others in that category based on a report by GlobalData.
If production plans for companies with substantial LNG prospects progress successfully, East Africa could join the US in becoming major exporters, according to a report from analytics firm GlobalData.
Based on 2011 figures, LNG supply is not keeping up with demand, falling just shy of the slightly more than 300 Bcm needed worldwide. Growing needs in Japan and South Korea, where LNG imports represent about 47% of global LNG import, are fueling the surge. However, supply is predicted to catch up by 2015, a year before the US is expected to begin exporting LNG thanks to healthy shale plays that have boosted natural gas production.
And by 2020, supply is expected to exceed demand as East Africa, led by Mozambique, emerges as one of the world’s leaders in LNG exports. Kenya and Tanzania were the other two key East African countries for LNG exports. By that time, supply would have reached more than 650 Bcm, surpassing a demand of about 550 Bcm.
“The recent discovery of new natural gas reserves and the possible potential for the development of LNG exports-related infrastructure have made East Africa an attractive destination for LNG exports,” the report said. “The scope of LNG exports to Asia-Pacific is especially high, as the region commands the highest LNG trade prices in the world and the geography of East Africa is suitable for exports of LNG to Asia-Pacific.”
In East Africa alone, recent finds – including those by Anadarko Petroleum Corp. and Eni SpA – could have 30 million metric tons per annum (MMtpa) of export capacity by 2020, GlobalData reported.
Anadarko Petroleum’s Offshore Area 1 in the Rovuma basin in Mozambique covers approximately 2.6 million acres. There, the company and its partners have drilled 11 successful wells, encountering natural gas pay ranging from 34 m (112 ft) to 169 m (554 ft) net. The Prosperidade complex, where nine of the wells are located, holds an estimated 17 Tcf to 30 Tcf of estimated recoverable resources, according to the company’s website. Just 20 miles northwest of Prosperidade, another complex is estimated to hold between 10 Tcf and 30 Tcf of recoverable natural gas resources.
More prospects exist, and the company already has embarked upon a major LNG project that will include an onshore liquefaction facility consisting of two trains with room to expand to six. The company and its partners plan to start exporting LNG from Mozambique by 2018.
Earlier this year, Eni announced a major natural gas discovery offshore Mozambique. The find has a mineral potential of 7.5 Tcf of gas in place. The discovery came just a few months after the Mamba South discovery. Combined, the two finds boost the total volume of gas in place to about 30 Tcf.
Although the future of LNG in Mozambique looks bright, the potential for growth doesn’t come without possible challenges, GlobalData noted. Among these are corruption and recovery from a civil war that ended in 1992 destroying most of the country’s infrastructure.
“Construction of large-scale LNG export facilities could prove a costly affair for the companies due to the lack of infrastructure and limited local industry,” the report said. “Additionally, any regulatory uncertainty and policy ambiguity could delay the development of the LNG export industry.”
Nonetheless, Mozambique has potential to join Australia and Qatar as one of the world’s leading LNG exporters. Australia was ranked the fourth largest exporter of LNG exporter in 2010, following Qatar, Indonesia, and Malaysia, according to the US Energy Information Administration (EIA).
Ranking first in LNG imports is Japan.
“The global LNG market is expected to experience supply constraints in the next couple of years as Japan’s demand for natural gas will remain substantially high,” GlobalData reported. “Japan shutdown its last nuclear power generation facility in May 2012. Consequently, the country has no nuclear power for the first time in four decades.
“Before the March 2011 earthquake and the resultant tsunamis, nuclear power approximately accounted for 26% of Japan’s electricity mix. The country is trying to fill the lost nuclear power generation capacity, primarily through natural gas-fired electricity generation.”
Due to higher natural gas consumption, GlobalData expects China to become the second largest LNG importer worldwide by 2020. Already, work is under way in China to increase coastal LNG regasification infrastructure to supplement demand. Regasification capacity stood at 1,047 Bcf for five operational regasification terminals in 2011. Capacity is projected to jump to 2,809 Bcf by year-end 2016, according to the report.
“It was estimated that if the share of natural gas in the country’s primary energy consumption increases by 1%, it could increase natural gas demand in the country by approximately 27 Bcm. If LNG imports alone were to satisfy this estimated increase in natural gas demand, then China will need to import 20 million metric tons per annum of LNG per year,” the report said.
“The increase in China’s LNG demand in the future is expected to have a substantial affect on the global LNG market. The high Chinese demand will further drive competition between the LNG-importing countries and contribute to the growth of the global LNG market.”
Crucial to meeting LNG demand will be investment in regasification and liquefaction terminals, LNG carriers, and new floating liquefaction technology such as floating LNG terminals to help capture offshore natural gas reserves. Such developments are already in the works. Royal Dutch Shell, for example, has plans to develop an FLNG production facility at its Prelude gas field offshore Australia.
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