ExxonMobil and Total are in talks over the unitisation or resource-sharing agreement of their liquefied natural gas (LNG) projects in Mozambique, Reuters reported, citing people familiar with the matter. The sources said the negotiations also involved the Mozambican government, which will give final approval to any new deal. The talks come as each company seeks to cut costs and increase natural gas output from a shared field that straddles their developments.
Eni and Anadarko signed the current unitisation contract in 2015. In 2017, Exxon acquired Eni’s stake in the Rovuma venture, while Total bought Anadarko’s stake in Mozambique LNG in 2019. According to the sources, both Exxon and Total wanted to rework the deal to allow them to boost efficiency and output.
The said field has “straddling” reserves containing thicker gas which is cheaper to extract and convert into LNG. Exxon and Total want to extract these reserves first, the sources said. Total made the final investment decision (FID) on its $20-billion Mozambique LNG project last year. Meanwhile, Exxon delayed the FID on its $30-billion Rovuma LNG project in April as it tried to conserve cash.
A study from Standard Bank said Exxon could use 15.1 Tcf of straddling gas reserves and 6.4 Tcf of non-straddling reserves from the Rovuma LNG project to produce 15.2 million tons/year of LNG. However, sources said that Exxon would instead increase the amount of gas it can access from the shared area to around 20.1 Tcf and would extract only from the straddling reserves. This is estimated to result in lower costs and higher LNG output at 16.4 million tons/year. Meanwhile, Mozambique LNG plans to start LNG production in 2024 with estimated production in the first phase of 12.88 million tons/year.
