By Sabina Zawadzki
LONDON, June 18 (Reuters) - U.S. energy firm AnadarkoPetroleum Corp gave the go-ahead on Tuesday for theconstruction of a $20 billion gas liquefaction and exportterminal in Mozambique, the largest single LNG project approvedin Africa, according to energy consultancy Wood Mackenzie.
The announcement, which occurred at an event in Mozambique,was widely expected after Anadarko last month flagged thedecision date.
Officials at Anadarko were not immediately available forcomment.
The project, which has committed long-term supplies toutilities, major LNG portfolio holders and state companies,underscores the industry's conviction that LNG demand will soarin years to come despite a slump in prices this year.
Low prices for the gas that is super-cooled fortransportation <LNG-AS> prompted fears final investmentdecisions (FIDs) such as Anadarko's would be delayed orscrapped. But the U.S. company gathered enough long-term buyersto underpin the financing of the project.
"Flexible commercial arrangements, including an innovativeco-purchase agreement with Tokyo Gas and Centrica, have been instrumental in securing the project a rosterof high-quality customers in a crowded LNG market," said FrankHarris, head of LNG Consulting at Wood Mackenzie.
LNG prices slumped this year as a jump in supply from newterminals in the United States, Australia and Russia were nottotally met by higher demand in Asia.
The trade is also nowhere near as developed as the marketfor crude oil, causing erratic price movements.
"At $20 billion, today's FID is the largest sanction ever insub-Saharan Africa oil and gas," added Jon Lawrence, an analystwith Wood Mackenzie's sub-Saharan Africa upstream team.
The project is also expected to be transformational forMozambique, one of the poorest nations on earth beset byeconomic crisis, conflict stemming from a civil war and seriousgovernance malaise, whose annual gross domestic product is just$13 billion.
With a 12.88 million tonne per year (mtpa) capacity,Mozambique LNG is one of the largest greenfield LNG facilitiesto have ever been approved. It involves building infrastructureto extract gas from a field offshore northern Mozambique, pumpit onshore and liquefy it, ready for further export by LNGtankers.
On the African east coast, the liquefaction plant will beable to sell LNG to both the lucrative Asian market, home to75%of global LNG demand, and to the flexible European market,which helps balance global LNG trade by soaking up excesssupply.
Mozambique LNG joins other mega-projects approved in thepast year such as Exxon Mobil Corp's 16 mtpa U.S. GoldenPass plant and Royal Dutch Shell Plc's 14 mtpa LNGCanada facility.
Still expected this year are approvals from Exxon for a 15.2mtpa project also in Mozambique, and from Russia's Novatekfor its 19.8 mtpa Arctic LNG-2 plant.
Anadarko has agreed to be taken over by Occidental Petroleum. Once that deal goes ahead, Occidental has agreed tosell assets including the Mozambique LNG project to French oilmajor and large LNG trader Total SA.
Anadarko's partners in the Mozambique LNG project are Mitsui, Mozambique state energy company ENH, Thailand's PTTand Indian energy firms ONGC, BharatPetroleum Resources and Oil India.(Reporting by Sabina Zawadzki in London; additional reportingby Scott DiSavino in New York and Debroop Roy in Bengaluru;Editing by Jan Harvey and Marguerita Choy)
