Exciting Developments in Mozambique’s LNG Sector: McDermott And ExxonMobil’s Strategic Partnership
McDermott Energy Solutions (UK), a subsidiary of the renowned U.S. offshore engineering and construction company McDermott, recently made headlines by securing a letter of intent (LOI) for a significant liquefied natural gas (LNG) project. This partnership is forged with ExxonMobil Moçambique, a subsidiary of the giant American energy corporation, on behalf of collaborators involved in a deepwater block off the coast of Mozambique. This collaboration promises to play a crucial role in the region’s vibrant energy landscape.
Working through the SMDC joint venture, which includes industry stalwarts such as Saipem, Daewoo Engineering & Construction Co. Ltd., and China Petroleum Engineering & Construction Corporation (CPECC), McDermott Energy Solutions has been entrusted by ExxonMobil Moçambique. The arrangement encompasses limited engineering and procurement services crucial for advancing the Rovuma LNG Phase 1 midstream development. This highlights the vital role of McDermott in facilitating the ambitious energy projects within the region.
In their communications, McDermott emphasized the breadth of experience that the SMDC joint venture brings to the table in the engineering, procurement, and construction of LNG facilities. The partnership with ExxonMobil is seen as pivotal in refining project details and advancing plans as the Area 4 collaborators approach their final investment decision (FID), anticipated for 2026, with current cost estimates hovering around $30 billion. However, precise final costs remain undetermined pending the project’s progression to FID.
Michael McKelvy, the Chief Executive Officer and Chair of the Board for McDermott, remarked, “Our work on Rovuma LNG builds on McDermott’s established LNG expertise in Mozambique and our disciplined approach to execution. Our experience on Mozambique LNG, combined with our long-term commitment to the country, positions us to deliver critical infrastructure that supports Mozambique’s emergence as a major global LNG supplier.” This sentiment underscores the deep-seated commitment McDermott has to not only the project but also to the local economy and workforce.
The Area 4 block, overseen by the Mozambique Rovuma Venture (MRV) consortium, consists of ExxonMobil, Eni, and China National Petroleum Corporation (CNPC). This consortium commands a 70% stake in the concession, shared with partners KOGAS, Empresa Nacional de Hidrocarbonetos (ENH), and ADNOC, which recently expanded its investment by acquiring Galp’s 10% interest in May 2024.
This vast Area 4 block lies in the Rovuma Basin, housing approximately 85 trillion cubic feet of natural gas resources. Notably, it encompasses Eni’s operational Coral Sul FLNG development, the planned Coral North FLNG project, and the ExxonMobil-led Rovuma LNG onshore liquefaction initiative.
While MRV operates the Area 4 concession, ExxonMobil Mozambique will lead the construction and operation of the Rovuma LNG facilities. This onshore development is set to include 12 modular liquefaction modules, collectively designed to produce a staggering 18.6 million tonnes of LNG annually, with first production expected in 2031.
Rob Shaul, McDermott’s Senior Vice President of Low Carbon Solutions, expressed confidence in the undertaking, stating, “This award reflects the strength of our long-standing relationship with ExxonMobil and our ability to deliver complex LNG developments. Having successfully executed front-end engineering design (FEED) for Rovuma LNG, we are well positioned to advance the project into its next phase.” This demonstrates a synergy between McDermott and ExxonMobil that has proven successful in complex developments.
McDermott’s engineering approach for the inside battery limits (ISBL), including the innovative liquefaction modules, will be orchestrated from its offices in London and Gurgaon, with project management support extended to the joint venture team based in Milan. The economic impact of the Rovuma LNG project is projected to be enormous, potentially generating around $150 billion in revenues for the government of Mozambique over its 30-year operational lifespan.
On top of that, the project is expected to contribute approximately $11 billion annually to Mozambique’s GDP and create over 150,000 jobs, as revealed by a macroeconomic analysis from Standard Bank. This significant influx of resources and opportunities underscores the potential for economic revitalization within Mozambique, paving the way for a sustainable energy future and improved living standards for its populace.
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