Gas exploration delays in Mozambique increase global market pressure

ExxonMobil’s decision to postpone its final investment decision on the Rovuma LNG project to 2026, initially expected by late 2025, has raised concerns over the impact of these delays on the global energy crisis. The company attributed the delay to operational hurdles in Cabo Delgado, Mozambique, an area with significant liquefied natural gas (LNG) reserves that is currently affected by “force majeure” conditions.

TORRE

Nov 11, 2024 - 19:40

Reports from sources such as Reuters and Energy Connects highlight that these setbacks come at a critical time, as global LNG supply is essential for balancing demand amid an ongoing energy transition. The absence of new, readily available gas sources places additional pressure on international markets, where LNG demand continues to grow, particularly in Asia.

Analysts indicate that delays across LNG projects in Mozambique and the U.S. mean only limited relief for high fuel prices. According to Energy Connects, “billion-dollar investments initially expected to create an LNG surplus by 2025 have been postponed.” This could mean prolonged pressure on prices as colder temperatures forecast for the European winter heighten competition with Asia for LNG, reducing availability for less competitive markets.

Florence Schmit, energy strategist at Rabobank, warns that even a surge in supply in the second half of 2025 may not suffice to meet growing demand, which now includes new importers like Egypt. Schmit points out that liquefaction projects in Mozambique, the U.S., and Mexico are delayed, while Western sanctions on Russia hinder progress on the Arctic LNG project. Rising global LNG demand, according to Schmit, sustains price volatility, even as prices ease from 2022 peaks.

In Mozambique, ExxonMobil stated that despite challenges, it has made significant progress on the Rovuma LNG project and is working closely with the government to foster a stable and secure environment. Production in the Area 4 block, shared with Italy’s Eni, could begin by ’s floating Coral Sul FLNG project, aims to position Mozambique among major LNG exporters with an expected annual output capacity of 18 million tonnes.

Cristian Signoretto, Eni’s deputy COO, emphasized the critical role of LNG in the global commodities market, noting that the success of floating LNG projects in Mozambique and Congo underscores Eni’s strategy to focus on natural gas. Eni has set a goal to ensure that gas comprises 90% of its hydrocarbon portfolio by 2050.