News dalla rete ITA

19 Luglio 2019

Mozambico

POSTPONEMENT OF ENH FINANCING MAY HAVE AN IMPACT ON EXXON’S FID – ANALYST

The director of Akap Energy consultancy believes that the postponement of the financing of Mozambique’s National Hydrocarbons Company (ENH) may have a negative effect on the final investment decision (FID)of the major gas project in the country. “Looking at the Exxon-led project, this [postponement] could have a negative impact on the Final Investment Decision expected by the end of this year. Funders could possibly become more nervous because of this postponement,” Anish Kapadia said in statements to Lusa. Commenting on ENH’s decision to postpone going to markets to finance its share of the US$2.3 billion Anadarko project due to difficult market conditions, the analyst explained that the best solution for the Mozambican oil company would be to wait for the government to get out of financial default and then to try better financing terms. ALSO READ: Just in: Mozambique delays raising $2.3 billion for Anadarko gas project – Bloomberg “ENH can ask the other partners to finance its share, and I think they would accept it reluctantly, but it would be very costly for ENH and it would take longer, so the best alternative is to finance itself after the Government leaves the situation of financial default,” Kapadia says. Last week, ENH Chairman Omar Mitha announced that the company would “return to markets when conditions are more attractive”, that is, with less risk and lower interest rates, in order to secure its stake in the US$25 billion (EUR 22.1 billion) investment project, of which EUR 5 billion has already been spent on exploratory activity. “Given the government default, it was probably harder than expected, or the cost of debt was higher than anticipated. It’s more a question of the government than the project not being viable, because all the other partners have already secured funding, which is further evidence of what we said [in a report in April]: that the government being in default does not help the funding of those involved in this project,” Kapadia ventures. “ENI and Exxon will be able to finance ENH’s share and be paid by cash flow generation later,” Kapadia thinks, “but this solution entails a higher financing cost for ENH and it may, on the other hand, leave investors less confident in ENH’s financial capacity, as it has considered it was unable to go to the market now to finance its share of the project led by US-based Anadarko”. Regardless of the solution that ENH chooses, it is certain that “they will not need the money immediately. They will only need it as they have to invest in the project over the next five years”. The decision itself was “not a big surprise”, mainly because of Mozambique’s known financial constraints, but Anadarko’s Rovuma Basin Area 1 project is already moving forward, Kapadia says. “The project has already had an FID and the main partners have all the funding prepared, so it is highly unlikely that the project will not progress, because a withdrawal would involve losses of billions of dollars due to contracts which have already been signed with suppliers, which would have to be reimbursed in case of default,” the analyst, who tracks energy issues in Africa, says. In addition to Anadarko, which leads the consortium with a 26.5% share, the group operating in Area 1 includes Japan’s Mitsui (20%), Mozambican state oil company, ENH (15%), and, with smaller holdings, India’s ONGC (10% ) and its subsidiary Beas (10%), Bharat Petro Resources (10%) and Thai PTTEP (8.5%). Anadarko is expected to hand over the leadership of the consortium to France’s Total by the end of the year, after being bought, albeit in a transaction still pending, by Occidental, another US oil company, which in turn has agreed to sell its assets in Africa to Total. The development plan for Rovuma Basin Area 1 in Cabo Delgado, Mozambique’s northernmost province, is estimated at US$25 billion, double the country’s annual gross domestic product. Natural gas projects are expected to go into production in about five years, boosting Mozambique’s annual economic growth by more than 10 percent a year, according to the International Monetary Fund and other entities. (ICE MAPUTO)


Fonte notizia: Lusa