Gasnosu pipeline still ‘key for Mozambique’ despite domestic gas tender setback

Author: Leigh Elston, Zitamar News
Date: 2017-02-01

The sponsors of Gasnosu, a project to build a gas pipeline running from the gas fields in northern Mozambique to South Africa, say they will continue to pursue the project after losing out in the domestic gas project tender this week.

“A north-south pipeline is key for Mozambique’s development” according to Marco Morgado, managing director ofMatola Gas Company which – like Gasnosu – is a joint-venture between Gigajoule and state oil company, ENH.

Morgado’s comments came at the Infra-Gas Projects Mozambique 2017 conference in Maputo on Tuesday, 31 January. Speaking to Zitamar News on the sidelines of the event, Morgado said the gas available now “is only a small quantity compared to what it could be,” and as the industry grows there will therefore be other opportunities to secure gas for the project.

Anadarko, the operator of the Offshore Area 1 gas block in the Rovuma Basin, and Eni, the operator of Offshore Area 4, are each planning to build two liquefaction trains in Mozambique’s northern province of Cabo Delgado. However, there is enough gas to feed at least six further LNG trains, and should these be brought onstream, more gas will be supplied to the domestic market.

In addition, new exploration should start offshore Mozambique later this year, or in early 2017.  State petroleum regulator INP, has said it expects to sign contracts with the winners of the fifth licensing round, which closed in October 2015, by June this year. Should ExxonMobilSasolEni and Delonex find new fields, 25% of this gas will have to be earmarked for the domestic market under Mozambique’s petroleum law.

Alternatively, rather than waiting for additional domestic market obligation gas to become available, Gasnosu could negotiate directly with the Area 1 and Area 4 consortiums for supply. The developers of a rival gas pipeline project – the African Renaissance Pipeline – have previously said they will look to secure gas in this way, and Morgado said this could also be an option for Gasnosu.

Prior to the launch of the tender, Gasnosu was envisaged as a 42-inch pipeline capable of delivering enough gas to generate 5,000 MW of power. South African electricity utility Eskom had been in talks with its Mozambican counterpart EDM last year to jointly develop 2,500 MW of power in Mozambique along the Gasnosu route, and a further 2,500 MW in South Africa.

However, given the maximum 400 MMcf/d of gas available under the domestic gas project tender versus the original pipeline’s requirement of around 835 MMcf/d, Gasnosu put a bid in for a far smaller pipeline project, which would only have supplied enough gas for a total of 2,000 MW of power.