Mozambique’s Geology is Part of the East African Four Geological Provinces.

East Africa Coast  consist of 900 Miles  of the African Coast  and Extending  to depths of water  ranging from  2,000 – 3,000 meters  from North to South  provinces as follows , [1]Tanzania’s Coastal Containing  Marginal sag , passive  margin Rocks  of the Mid Jurassic to Holocene age; [2] Seychelles , characterized by Rift marginal sag, passive , and drift rocks; [3] the Morondava (Madagascar) Containing  failed Rift,  marginal sag  and passive  margin rocks ; and [4]  the Mozambique Coastal  described by  rift  marginal sag  and passive margin Rocks.

The Four provinces were related to a break up of Godwana in the late Paleozoic and Mesozoic phases and developed similarly through two tectonic phases. The Syn – Rift phase that was started during the Permo – Triassic and continued in to Jurassic, resulting in Formation of Grabens and half grabens. The other is the drift phase that began in the Mid Jurassic and Continued in to the Paleogene. A Later passive margin phase began in the Paleogene and continues to present in Madagascar, Mozambique and Tanzania coastal Provinces.

All four East African Provinces contain Mesozoic and Cenozoic Clastic reservoirs that host Hydrocarbon source rocks. The Rocks Maturation, generation and migration trap hydrocarbon accumulation

Rovuma Basin is one  of the six passive Continental margin basins of East Africa that Include, Somali, Lamu, Tanzania, Rovuma and Zambezi Delta. The Basins total up to 2,000,0000 Km2 in Areas. Gas Discoveries in these Region date back to then 1970‘s However by 2014 a Total of 170 Trillion Cubic Feet (Tcf) gas discoveries had been made making East Africa’s Hydrocarbon Province one of Extreme.

Rovuma Basin’s Geology and Evolution involves two stages. First stage was the NE-SW trending intercontinental Karoo system developed in the Permo – Triassic with facies ranging from fluvial to lacustrine to deltaic.  The second stage was the initiation of Gondwana break – up, occurring in the middle Jurassic, resulting in the Southward drift of Madagascar away from East Africa.  A Passive continental margin developed along the western coast of Africa from the middle Jurassic to Early Cretaceous represented almost by Continental Margin developed  along the western coast f Madagascar and   the Eastern Coast of Africa from Middle Jurassic to Early Cretaceous  represented almost by  continental – transitional to shallow marine deposits followed by development of wide spread marine transgression.

Hydrocarbon Deposition and Accumulation in Rovuma Basin resulted from the Formation of Rocks from continental drifting i.e. the three Distinct structural phases corresponding to basin evolution recognized as; Karoo rifting, S- N extension during the early stages of Gondwana Break up, followed by Tertiary  Extension  and Listric fault growth.  Formation of Rocks probably occurred  at various  times Throughout  late cretaceous and Tertiary times Followed by  vertical and lateral  migration Relatively short and Long  distance respectively, lead to  the Hydrocarbon  accumulation within Drift sequence  such as Delta sand bodies and deep sea Turbide  deposits.

In Rovuma Basin Area 4 and 1 whose main Reservoir is Paleocene – Oligocene sand,  An ENI & Anadarko Led consortium has intercepted  the Largest Gas Discovery in East Africa with Total Recoverable  gas reserves of 150 Trillion Cubic Feet .

This New Discovery has catapulted Mozambique to Among World’s hydrocarbon Province, with More Exploration and development planned  it is Expected that Mozambique could Overtake Nigeria and Algeria as the African country with the Largest Gas reserves. Creating another African super player as the country plans to step up production from 10 million tons per annum Mpta (Projections) to   an envisaged 50 Million tons per annum (Mpta). Access to lucrative Asia Pacific LNG markets has significant economic benefits to Mozambique and the East Africa Region.

Over 100 Exploration and appraisal wells have been drilled in Mozambique since the Early 1950‘s. The Discovery of the Temane onshore Gas Field in 1952 proved the onshore gas Potential. Drilling Activity reached peak in 1967, the year of first off shore wells, and continued until 1970’s with Discovery of 5 onshore fields. Political unrest interrupted drilling activities until the late 1980s when it resumed without commercial success until the opening of offshore deep water in with signing of 2 PSC for Area 1 and Area 4 in 2006.

The First commercial gas discovery offshore Mozambique was Winjammer – 1 drilled in Area 1 by Anadarko by February 2010, Whilst ENI announced its First discovery in Mamba South – 1 in 2011. Since then Both Companies  have had an unprecedented exploration Success, Discovering in Excess of  150 Trillion cubic feet of gas resources in aggregate in a number of field’s within Area 1 and 4.

Area 1:

Area 1 is operated by Anadarko (26.5%) alongside Mutsui & Co. (20%), India’s Natural Gas Corp. (ONGC – 10%) , Bharat Petroleum, (10%) ENH (15%) and the Thai state Company PTTEP (8.5 %), ONGC , Oil India and PTTEP bought stakes from the Existing Initial JV Partners as well as Anadarko.

 Area 4:

Area 4 is operated by ENI (50%) ALOMGSIDE CNPC (20%) , ENH (10%), Galp Energia (10%)  and Kogas (10%). CNPC bought interests from ENI.

Oil Prospects:

Although most discoveries made have been gas, the potential for oil is real in Mozambique ‘Commercial reserves are thus dominated by gas however Oil was discovered onshore in Inhassoro field whilst the Pande – Temane fields also Contain Liquids. Anadarko’s well Ironclad -1 Drilled  in Area1 found oil and Gas in Low permeability reservoir de – risking the Oil Potential of the offshore Rovuma  basin.  Anadarko, Maurel and Prom and Wentworth Resources drilled for Oil at the Tembo  -1 onshore location but found non – Commercial  volumes of Gas/ Condensates and Continued their Drilling at Kifaru – 1 location, also onshore.

LNG – Exports are Key to Monetization.

Mozambique’s current 150 Tcf and 1,000b/d (oil) production comes from the Sasol operated Pande – Temane fields Located onshore in Mozambique‘s Basin. The gas Condensates production began in 2004 and is expected to peak at 83kboe/d in 2016E. Sasol is expected to begin oil Production from the Inhassoro field in 2015E.

The Domestic gas market is limited and, as a result, production is currently almost entirely exported to South Africa and only small amount of gas is supplied to a domestic power station. In the vicinity of the field and the Condensate is sold to domestic buyers.

Hence the Key monetization of the large resources discovered offshore Rovuma Basin is LNG Exports. The Long – term Vision for Rovuma is to build the Capacity and infrastructure to become of the Largest LNG Exports sites in the world, possibly after the Ras Laffan in Qatar. The site selected for the modular LNG onshore plant o up to 12 trains (c 50 Mpta capacity) is on the Afungi Peninsula near Palma in the Cabo Delgado province. Offshore wells will connect to subsea pipeline network which will bring gas to the LNG site onshore.

Area 1’s Prosperidade complex on which Windjammer, Barquentine and Camarao are located and Area 4 Mamba Complex have been found to be in communication. Hence unitization is required before the two JVs can start a Joint Venture Development scheme. Given its state readiness and proximity to shore without the need for unitization, we would have expected that Area 1 Golfinho / Atum complex to be developed first.  However the government now requires a joint venture development plan is submitted in the next 6 Month s for the prosperide/ Mamba Complex Straddling Area 1 and 4.

ENI is looking to develop its own Coral Complex in Area 4 using floating – LNG technology (FNLG) an d has Launched a Feasibility study for this Project. ENI is also investigating the Feasibility of a GTL Plant together with Sasol.

Next Steps to FID in Mozambique.\

According to SBG Securities Anadarko expects to complete an Initial 2 – train LNG Development as an integrated upstream/ Midstream project, targeting  an FID IN 2015E and first  gas in 2020E Assuming that resources unitization is completed by mid 2015E, SBG believes that this is achievable. The Following is a Timetable with a timeline provided for as an integrated development project as well as separate development for Area 1 and 4.

Assuming that the FEED for an offshore development project to an onshore LNG Facility is now complete. FID is expected to be completed for Gas Sale agreement, for which Anadarko has a non – binding heads of Agreement for 80% of 10 Mpta 2 train facility.

Shareholding within the Existing JV (Joint Venture) could potentially Change to a lesser or Larger extent before FID, with possible some level of Consolidation with the JV and possibly across the JVs. This makes the arrival of another Major Likely in Addition to ENI, whose interest could straddle Area 1 and Area 4 and which would bring expertise  and consistency approach to  the assets  as well as the government across the project.

Final Investment Decision (FID) Onshore LNG Development project is Expected in the Fourth Quarter of 2014/ 4Q15 E and after a 4 – years construction period to start gas production in early 2020 E.