Mozambique to begin LNG exports in 2018 to feed Asia demand -minister

Thu Nov 28, 2013 5:06am EST

* Targeting sales mainly to Japan, India, China, South Korea

* Gas pipeline to capital Maputo to be ready in March

By Seng Li Peng

SINGAPORE, Nov 28 (Reuters) - Mozambique will start liquefied natural gas (LNG) exports in 2018 to feed booming Asian demand, its deputy minister of resources said, aiming to counter speculation the African nation will struggle to start shipments by then.

The former Portuguese colony is hoping to tap vast unexploited reserves of natural resources such as gas and coal to boost revenues and pull its war-scarred population out of poverty. It is in a race with neighbouring Tanzania to be the first East African nation to export LNG.

"2018 is the window of opportunity we have set up," Abdul Razak Noormahomed, told Reuters in an interview on Wednesday at the Africa Asia Oil & Gas Summit conference in Singapore.

That's "still on track," he said, adding that the main targets for LNG sales are Japan, India, China and South Korea.

Some 150 trillion cubic feet of gas have been found off Mozambique so far, enough to supply Germany, Britain, France and Italy for 15 years. The government and companies scouting wells have estimated there may be potential to double that estimate.

The huge potential has made Mozambique the new darling of the industry, with companies from India, China and Russia queuing for a share of the bonanza.

India's Oil and Natural Gas Corp agreed in August to buy a stake in an offshore field from Anadarko Petroleum Corp for $2.64 billion. Russian state gas monopoly Gazprom and China National Petroleum Corp (CNPC) are also interested in similar assets.

Despite Mozambique's and Tanzania's huge potential, there are concerns that neither country will be able to develop their gas resources to full potential. That's partly because of a thriving shale gas industry in the United States, which is expected to start exporting LNG from 2015.

Since April Mozambique's image as a stable and fast-growing African success story blessed with big coal and natural gas reserves has also been blotted by shootings and ambushes in the centre and north carried out by an opposition guerrilla group.

The violence has sparked worries of a return to broad military conflict more than two decades after the end of the country's 1975-1992 civil war.

PIPELINE, COAL EXPORTS

Mozambique is also building a pipeline with Korea Gas Corporation (KOGAS) to bring natural gas to its capital Maputo and expects it to be ready in March 2014, the minister said.

The pipeline, which is majority owned by KOGAS, is part of a drive by Mozambique to reduce its reliance on imported oil products and make use of its abundant gas resources to produce electricity.

"There's no oil in Mozambique. For the time being, we have no refineries," Noormahomed said.

Mozambique aims to produce cheap electricity to help supply the four-fifths of its 23 million people who still have no access to power.

Mozambique is also struggling to boost coal exports.

The country plans to export 50 million tonnes of coal from 2020, the deputy minister told a panel at the conference, less than half an earlier government target.

The country's north-central Tete province boasts some of the world's largest untapped reserves of thermal coal for power generation and coking coal for steel production.

Some 23 billion tonnes of coal are estimated to lie beneath Tete, Noormahomed said, and the country plans to launch a round of bidding for coal mining there and in Niassa province in June next year.

But the surge in kidnappings and political violence has worried some investors, and prompted Rio Tinto to withdraw expatriate employees' families last month.

Rio was also forced to suspend coal shipments earlier in the year. (Writing by Manash Goswami; Editing by Tom Hogue)

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