China National Offshore Oil Co secures oil exploration contracts in Mozambique

State-run China National Offshore Oil Corporation announced on Friday that it has inked concession contracts for oil exploration and production with Mozambique's energy ministry and national energy company ENH.

The contract is for five offshore blocks in waters off the African nation, totalling approximately 29,000 square kilometres with ocean depths ranging from 500 to 2,500 meters, according to the statement.

The first phase of the exploration period lasts four years, with five CNOOC subsidiaries acting as operators during the exploration and development phases, with separate operator rights and interests. 

ENH owns the remaining non-operational interests. 

In 2019, CNOOC's gas and power arm Singapore Trading and Marketing entered a 13-year sale and purchase deal with Mozambique LNG1 Company for liquefied natural gas (LNG) from the Mozambique Area 1 onshore LNG project. 

CNOOC stated at earnings briefing in March that it intends to increase reserves and output this year. 

Mozambique gas potential

According to the Oil & Gas Journal, Mozambique has 100 trillion cubic feet (Tcf) of proved natural gas reserves, making it Africa's third-largest holder after Nigeria and Algeria.

Mozambique is poised to become a significant liquified natural gas (LNG) exporter over the next decade, following the discovery of approximately 180 trillion cubic feet (TCF) of natural gas reserves in the Rovuma basin in the country's north.

These discoveries are split across two concessions, the first led by Total Energies and the second by Eni and ExxonMobil, making Mozambique Africa's third-largest holder after Nigeria and Algeria.

The US Export-Import Bank has committed to lending $4.7 billion of the approximately $20 billion investment in TotalEnergies' Area 1 Mozambique LNG project, while the US Development Finance Corporation has extended $1.5 billion in sovereign risk insurance to Exxon Mobil's Area 4 Rovuma LNG project, representing the US government's largest investment commitment on the continent.

Most recently, ADNOC announced acquiring Galp's 10% holding in the Area 4 concession of Mozambique's Rovuma basin. As a result, ADNOC will receive a portion of the concession's liquefied natural gas (LNG) output, which has a total capacity of more than 25 million tonnes per year. The Area 4 concession includes the existing Coral South Floating LNG (FLNG) facility, the projected Coral North FLNG development, and the proposed Rovuma LNG onshore facilities.