It is pertinent to state that the EARR Gas Basin has failed to live up to its full potential due to a series of endemic bottlenecks faced in the host countries. In Tanzania, the US$40 billion Tanzania LNG project, which aims to receive gas feedstock from six fields across Blocks 1 and 4 (Shell) and Block 2 (Equinor), has been subject to extensive delays due to protracted negotiations rooted in unattractive fiscal terms due to high domestic supply obligations.<\/p>\n
The story behind undeveloped gas reserves is quite different for the reserves offshore Mozambique, with the main culprit being the Islamist insurgency in Cabo Delgado province. The conflict has led to delays in final investment decisions (FIDs) and project start-ups, given declarations of force majeure for key projects. An example is TotalEnergies\u2019 enforcing force majeure on the 13mmtpa Mozambique LNG project, delaying production start from the operator’s Golfinho-Atum field into 2028, nine years post sanction. On a similar note, ExxonMobil’s Rovuma LNG project also felt the knock-on effect following the declaration of force majeure by TotalEnergies, given that it plans to share some facilities belonging to the Mozambique LNG project. ExxonMobil, however, seized this as an opportunity to cut costs by heavily reconfiguring the design plan from its initial two-train 15.2mmtpa stick-build facility to an 18mmtpa facility now being constructed using a modular approach whilst putting some emphasis on mitigating greenhouse gas emissions from the project. To date, ExxonMobil has launched tenders for a front-end engineering and design (FEED) contract and an engineering, procurement, construction and installation (EPCI) option for the subsea-to-shore gas gathering facilities.<\/p>\n
Another factor contributing to the untimely development of resources in Mozambique is complicated project economics. TotalEnergies highlighted this in 2023 when it reported that supply chain inflationary pressures further complicated the resumption of the US$20 billion Mozambique LNG project. However, there have been signs of positive progress, given that TotalEnergies communicated in the company\u2019s April 2024 earnings call that contractors have agreed to reverse contract inflation plans; thus, this is no longer an obstacle to the project\u2019s sanctioning decision.[\/vc_column_text][image_with_animation image_url=”16781″ image_size=”full” animation_type=”entrance” animation=”Fade In” hover_animation=”none” alignment=”” border_radius=”none” box_shadow=”none” image_loading=”default” max_width=”100%” max_width_mobile=”default”][vc_column_text]\n
There is potential upside from the Mnazi Bay project, which came online in 2006 and currently accounts for approximately 50% of Tanzania’s total production. In February 2024 Tanzania Petroleum Development Corp increased its stake in the development to 40%, with operator Maurel & Prom stating that the two companies planned to invest US$100 million to extend gas compression infrastructure and boost drilling. However, the spectre of delays that have been haunting projects remains strong, potentially diluting the positive picture prior to 2030, especially since only one of the three projects expected onstream by 2030 has passed sanctioning (TotalEnergies\u2019 Golfinho-Atum).[\/vc_column_text][image_with_animation image_url=”16734″ image_size=”full” animation_type=”entrance” animation=”Fade In” hover_animation=”none” alignment=”” border_radius=”none” box_shadow=”none” image_loading=”default” max_width=”100%” max_width_mobile=”default”][vc_column_text]\n
Additionally, it is noteworthy to highlight the potential for an uptick in E&A drilling activity beyond Westwood\u2019s current forecasts. This is due to the semi-autonomous Government of Zanzibar, off-Tanzania, launching its inaugural five-year licensing round in March of 2024, inviting IECs to explore eight offshore blocks. E&A drilling could also occur in Mozambique, given that the National Hydrocarbon Company approved a concession contract for oil exploration and production in the Angoche A6-C Area in July 2024. However, Westwood is bearish on these progressing into any E&A drilling activity before the second half of the forecast.<\/p>\n
When dissecting current developments in the EARR Basin, it is evident that by the onset of the next decade, the Basin could contribute about 300kboepd of gas to meet global LNG demand. Westwood anticipates that Mozambique will continue to lead production and drilling in the EARR Basin through to 2030. However, it remains crucial for the Mozambican government to continue to take strides towards eradicating the insurgency to guarantee rapid progression of projects off Cabo Delegado province, which are currently mainly in the FEED stage. Contrarily, on the Tanzanian side of the Basin, the portrait is more promising than in the hindcast, albeit there is still a need to focus on improving fiscal terms to attract more near-term investment and ensure that current interest from IECs is maintained. Overall, Westwood believes that by 2030, the EARR Gas Basin might start to live up to its potential as projects finally move from potential to reality.[\/vc_column_text][vc_column_text]Michela Francisco, <\/strong>Analyst \u2013 Onshore Energy Services<\/em> [vc_row type=”in_container” full_screen_row_position=”middle” column_margin=”default” column_direction=”default” column_direction_tablet=”default” column_direction_phone=”default” scene_position=”center” text_color=”dark” text_align=”left” row_border_radius=”none” row_border_radius_applies=”bg” overflow=”visible” overlay_strength=”0.3″ gradient_direction=”left_to_right”…<\/p>\n","protected":false},"author":13,"featured_media":16741,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[353,327,346,723,48,445,341,339,444,404,49],"tags":[59,847,93,674,70,65,488,154],"class_list":{"0":"post-16732","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-all_articles","8":"category-global-land-rigs","9":"category-international-land-rigs","10":"category-michela-francisco","11":"category-news","12":"category-offshore-energy-services","13":"category-offshore-epc","14":"category-offshore-rigs","15":"category-onshore-energy-services","16":"category-wells-services-equipment","17":"category-westwood-insight","18":"tag-drilling","19":"tag-east-africa","20":"tag-gas","21":"tag-liquified-natural-gas","22":"tag-lng","23":"tag-offshore","24":"tag-onshore","25":"tag-wells"},"acf":[],"yoast_head":"\n
\nmfrancisco@westwoodenergy.com<\/a>[\/vc_column_text][vc_column_text]*Estimates are from the Tanzanian Investment Centre, which reports the Tanzanian side of the EARR Basin holds reserves of 41.7tcf and from Westwood, which estimates that the Mozambican side of the basin currently holds reserves 124tcf.<\/em>[\/vc_column_text][divider line_type=”Small Line” line_alignment=”default” line_thickness=”2″ divider_color=”extra-color-1″][vc_column_text]Data is derived from Westwood\u2019s Wells & Production Outlook 2023-2030<\/strong><\/a>, which is a series of four regional reports covering onshore and offshore drilling and production outlooks for Africa & Europe, the Americas, Asia Pacific and the Middle East. Published bi-annually, they are available to purchase individually or as a bundle.[\/vc_column_text][\/vc_column][\/vc_row][vc_row type=”in_container” full_screen_row_position=”middle” column_margin=”default” column_direction=”default” column_direction_tablet=”default” column_direction_phone=”default” scene_position=”center” text_color=”dark” text_align=”left” row_border_radius=”none” row_border_radius_applies=”bg” overflow=”visible” disable_element=”yes” advanced_gradient_angle=”0″ overlay_strength=”0.3″ gradient_direction=”left_to_right” shape_divider_position=”bottom” bg_image_animation=”none” gradient_type=”default” shape_type=””][vc_column column_padding=”no-extra-padding” column_padding_tablet=”inherit” column_padding_phone=”inherit” column_padding_position=”all” column_element_spacing=”default” background_color_opacity=”1″ background_hover_color_opacity=”1″ column_shadow=”none” column_border_radius=”none” column_link_target=”_self” column_position=”default” gradient_direction=”left_to_right” overlay_strength=”0.3″ width=”1\/1″ tablet_width_inherit=”default” tablet_text_alignment=”default” phone_text_alignment=”default” animation_type=”default” bg_image_animation=”none” border_type=”simple” column_border_width=”none” column_border_style=”solid”][\/vc_column][\/vc_row]\n","protected":false},"excerpt":{"rendered":"