Following a project update from its joint venture partner, McDermott, Italy’s engineering, drilling, and construction services giant Saipem has corroborated the progress made in moving forward with the next phase of one of Africa’s most closely watched liquefied natural gas (LNG) developments, as new activity signals continued momentum toward a final investment decision (FID) for Mozambique’s multibillion-dollar LNG project.
On the heels of McDermott’s announcement, Saipem has confirmed the signing of a letter of intent (LOI) for the ExxonMobil-operated Rovuma LNG Phase 1 project in Mozambique. The final award to the Italian giant within the SMDC joint venture, which includes McDermott, Saipem, Daewoo Engineering & Construction, and China Petroleum Engineering & Construction Corporation (CPECC), hinges on the final investment decision and several expected government and regulatory approvals by 2026.
The LOI, inked with ExxonMobil on behalf of the Area 4 partners, encompasses the Mozambique Rovuma Venture (MRV), which consists of ExxonMobil, Eni, and China National Petroleum Corporation (CNPC). These partners collectively dominate the Area 4 block, with ExxonMobil holding a commanding 70% interest in the concession. The remaining 30% is shared between KOGAS, Empresa Nacional de Hidrocarbonetos (ENH), and ADNOC’s XRG, each holding 10%. The Rovuma LNG project stands as one of the most ambitious ventures globally, with an estimated budget of around $30 billion.
The letter of intent encompasses limited preliminary engineering and procurement activities, targeting advanced project definition and execution planning, with an initial budget of $32 million. The comprehensive engineering, procurement, and construction (EPC) contract award to the SMDC joint venture, however, remains contingent upon a favorable FID by the Area 4 deepwater block partners and the necessary governmental and regulatory approvals anticipated within the next few years.
This recent development follows the front-end engineering design (FEED) contract awarded to the SMDC partnership in August 2024. The Rovuma LNG project plans to establish an onshore natural gas liquefaction plant on the Afungi Peninsula. The project will feature two LNG trains equipped with 12 modular liquefaction modules, ultimately yielding a significant production capacity of approximately 18.6 million tonnes of LNG annually.
In this joint venture, Saipem aims to leverage its extensive expertise in developing and executing large-scale LNG projects along with complex energy infrastructures. Their contribution will be pivotal in facilitating the engineering and procurement tasks essential for supporting project definition and preparation.
“This letter of intent further strengthens Saipem’s position in the liquefied natural gas sector and highlights the group’s expertise in executing large-scale, complex energy projects, contributing to the potential development of one of the most significant LNG initiatives currently under planning worldwide,” emphasized the Italian giant.
The Area 4 block situated in the Rovuma Basin harbors approximately 85 trillion cubic feet of natural gas resources. This area not only emphasizes the operational significance of Eni’s existing Coral Sul FLNG development but also houses plans for the Coral North FLNG project and the ExxonMobil-led onshore liquefaction efforts of the Rovuma LNG.
While MRV operates the Area 4 concession, ExxonMobil Mozambique takes charge as the delegated operator responsible for constructing and managing the Rovuma LNG facilities with operational commencement forecast for 2031.
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