Chinese Energy Major Inks Oil Deal With Mozambique

The China National Offshore Oil Co, or CNOOC, has signed an exploration and production deal for five oil and gas blocks in Mozambique, Reuters reported, citing a CNOOC statement.

The five blocks are offshore the African country, in depths ranging between 500 meters and 2,500 meters, the Chinese state-owned company said.

The exploration stage of the deal will last for four years, CNOOC also said, with five of its subsidiaries acting as operators for each of the blocks, which the Chinese company will be exploring in partnership with Mozambique’s state energy company, ENH.

Mozambique has substantial natural gas reserves that could turn the country into a major LNG producer, according to the U.S. International Trade Administration. With reserves estimated at more than 180 trillion cu ft, the potential for development is indeed significant.

However, the actual development of these reserves has proven to be challenging. There are two significant LNG projects in progress in Mozambique, the Rovuma LNG led by Exxon and the Mozambique LNG project led by France’s TotalEnergies.

The chief risk for the projects, which has led to delays for both, is political instability and activity by Islamist organizations. Despite this risk, however, Exxon recently signaled it will press ahead with Rovuma LNG, planning to make the final investment decision on the project at the end of 2025.

“We recognise there are challenges and there are. We recognise that those challenges can be overcome if we work together,” the head of Exxon’s Mozambique operations said earlier this month.

Meanwhile, the UAE’s Adnoc became a shareholder in the Rovuma project, after it recently bought the stake previously held by Portugal’s Galp.

“This strategic investment is ADNOC’s first in Mozambique and complements ADNOC’s efforts to expand its lower-carbon LNG portfolio to meet growing gas demand and support a just, orderly and equitable energy transition,” the Emirati company said after the 10%-stake acquisition.

Source: Oilprice.com