The jewel of the Indian ocean

 By Marilia Cioni

“This is the news that 27 million Mozambicans have been waiting for. It’s the news of the year.” These were the words of Eduardo Samo Gudo, director of AIM, the Mozambican press agency, when he received an invitation to the launch of Coral South. An invitation certifying that Eni, ENH, GALP, CNPC and Kogas have reached the Final Investment Decision (FID), and that the project will go ahead….

The tone of voice, the restrained enthusiasm and distant gaze of Samo Gudo are eloquent: this is not just any project. This FID does not only mark the beginning of an industrial project, however important: it is a new beginning for Mozambique; the sign that the country can get back on track after January’s default. It is a demonstration that despite credit problems, investors are once again confident in the country and its ability to finance and implement complex, long-term projects. “Coral has overcome the hurdles,” a newspaper headline announced, and along with Coral, Mozambique is once again counting on hoisting the sails of economic growth: “At last we can start turning our resources into revenue,” said Mozambique President Filipe Nyusi, “getting back to levels of economic performance of the last decade,” a period when the country grew at a rate of 7% per year.

Over 450 billion cubic metres of gas in place, production for at least 25 years, investments of around $8 billion, over $16 billion of revenues for the Mozambican government: numbers that only partially explain the size and complexity of the project. Coral South is the first stage in the production of the enormous gas reservoirs of the Rovuma basin, the river that marks the border between Mozambique and Tanzania. “It’s great, very big, but it’s just the start,” Claudio Descalzi told Maputo reporters, because Coral South will produce about 140 billion cubic metres, a small portion of the estimated 2,400 billion cubic metres in Area 4 alone, which in turn is part of a basin that includes at least 4,500 billion cubic metres.

Area 4 is an ultra-deepwater exploration block in offshore northern Mozambique, around 50 km from the District of Palma and 200 km from the city of Pemba, at depths of between 1,500 and 2,200m below sea level. To date, 15 exploration wells have been drilled and 5 discoveries made (4 Mamba + 1 Agulha) and a production and development area defined (Coral) in the block. The block’s estimated reserves amount to over 4,500 billion cubic metres of gas.

For the development of Coral South, Eni and its partners in the project – the Mozambique company ENH, China’s CNPC, Portugal’s Galp’s and the South Korean firm Kogas – have chosen a cutting-edge solution: a FLNG, a huge floating plant that extracts and liquefies gas from the reservoir. “The FLNG is the best solution possible, both from a technical and production point of view, as well as in terms of the environmental impact,” explains Stefano Rovelli, the Coral project’s Development Director. “The field is quite far from the coast, and the seabed has a canyon that is up to 13,000 metres wide and up to 300 metres deep, which makes it difficult to lay pipes laying to transport the gas to the shore. With a FLNG, the project’s footprint is minimal, limited to the underwater area where we will install 3 manifolds, the moorings for the vessel and the flexible lines for connection to the FLNG.”

But what about the vessel itself? There are only 2 other FLNGs in the world, one in Malaysia, already operational, and one in Australia. Moreover, the Coral South FLNG will be the first in the world to operate in the ultradeep waters: the Coral reservoir is between 1500 and 2200 meters deep. Overall, it is based on recent and sophisticated technology. Indeed, as Rovelli explains, “It will be over 400 metres long and 66 metres wide, larger than any existing container ship in the world, and with a total weight of over 200,000 tons.” One of the challenges from and engineering point of view was to combine all the components of the plant in a space equal to a third or a quarter of what they would occupy on the ground. And then it is necessary to make all the stages of the production cycle safe, regardless of the sea conditions. “We organised an international tender for the Front End Engineering Design (FEED) and subsequent construction, which attracted all of the major players in the industry. The design proposed by the TJS consortium passed all the internal and external screenings, demanded by the Mozambique Government, the gas buyer and project’s financial backers, ”Rovelli says. “It includes components and technology from Italy, Norway, UK, France, Korea, Japan, the US and Singapore. With 8 tanks for the collection of liquefied natural gas, it will have a production capacity of 3.4 million tons per year.”

The general consensus is that this was the right choice. BP, that has already pledged to buy all the liquefied gas produced by Coral South; ExxonMobil, that is about to take a stake in Eni East Africa; the 15 international banks and 5 export credit agencies with which contracts for financing 60% of the project have been signed – the first project financing project in the world for a FLNG.

The Coral South project is the first phase of the development of Coral, that will bring the gas resources of the southern part of the field into production. The project is based on 6 underwater wells linked to a FLNG by means of a subsea production system (SPS), umbilicals, risers and flowlines. The FLNG is an integrated gas extraction unit with processing, liquefaction, storage and transport systems with a production capacity of around 3.4 million tons of LNG/year.

“This FLNG positions Mozambique on world’s gas trading routes,” underlined President Filipe Nyusi, “and launches the transformation of our natural resources into economic resources.” The expectations of the benefits that will result out are high. “We want the exploitation of our resources to stimulate the development of transformative industries that bring added value to modernise and diversify our economy, reduce imports and increase exports, create jobs, effectively combat poverty and regional disparities.”

For many analysts, the launch of Coral South means that the debt crisis is not a brake on the funding of ambitious projects for companies with a long-term vision. And it is that long-term vision that led Eni and its partners to making complex choices that will give Mozambique an important role in the global energy scenario and, at the same time, contribute to transforming the global energy paradigm into a low CO2 content economy.

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about the author
Marilia Cioni
Marilia is a content producer and press officer at Eni, where she focuses on Exploration, Upstream and Technical Activities in Sub-Saharan Africa. Previously she worked for Italian news agency Agi, where she was in charge of international relations.