Why Mozambique LNG FID breakthrough should pile pressure on NLNG Train 7

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After numerous years of challenges, Mozambique liquefied natural (LNG) project reached its final investment decision (FID), making the $20 billion project one of the largest investments in Africa and also one of the largest Greenfield LNG facilities to have ever been approved.

“At $20 billion, the FID is the largest sanction ever in sub-Saharan Africa oil and gas,” said Jon Lawrence, an analyst with Wood Mackenzie’s sub-Saharan Africa upstream team.

Meanwhile, there is still uncertainty on when the FID on Nigeria LNG Limited Train 7 will be taken after the signing of the Front End Engineering Design (FEED) contract in 2018. The NLNG Train 7 expansion project aims to increase the company’s production capacity from 22 metric tonnes per annum to over 30 MTPA.

As a result of the delay on NLNG Train 7, here are reasons why the Mozambique LNG FID should pile more pressure on Nigeria;

Being on the African east coast, the Mozambique LNG will be quite competitive and they can sell LNG to both the lucrative Asian market, home to 75 percent of global LNG demand, and to the flexible European market, which helps balance global LNG trade by soaking up excess supply.

Also, delay in reaching FID on Train 7 may lead to further construction delays and cost blowouts as there are a limited number of contractors able to handle the huge projects, experts say.

“Unless you are in FID in the next two years, there is going to be no one to build your project,” Ian Munro, Oil Search executive general manager said at Australian Energy Conference.

Also, Martin Houston, co-founder of Tellurian Inc, said LNG developers who fail to sign major contractors, such as Bechtel Corp or Chiyoda Corp, who can offer fixed price construction contracts are likely to