An interview with Anadarko Petroleum Corporation - Ensuring stable energy supplies

Rajnish Goswami's picture
Rajnish Goswami, General Manager, LNG Marketing, SE Asia, Indian Sub-Continent & Middle East, Anadarko Petroleum Corporation
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The geographic location of Mozambique LNG, the country's first LNG park, provides flexibility to pursue various customers; particularly the growing Asian market. 

Speaking at the Gas Asia Summit, Anadarko's General Manager Rajnish Goswami spoke to Gastech Insights about Mozambique LNG's long-term plans and shared what he thinks about current gas pricing. 

Gastech Insights: Considering today’s market environment, what do LNG buyers want in undertaking new agreements?

Rajnish Goswami: Every LNG buyer is unique and requirements will be driven by a host of factors including domestic market conditions; differing views of the future dynamics in the LNG market; commodity price expectations, and others. In our extensive engagement with LNG buyers, we observe some common threads such as:

1.  Increasing need for volume and destination flexibility

  • Volume: Liberalisation in mature markets (i.e. Japan) and uncertain growth prospects in emerging markets are making buyers less willing to commit to large offtake volumes unless they have mechanisms embedded to the contract to manage future swings (both up and down) in demand
  • Uncertainty in energy policy is also increasing potential buyers’ hesitance to commit

2. Competitive prices

  • Given the perception of increased supply in the near term (next 2-3 years) and increased liberalization and associated competition in home markets is putting competitiveness at the forefront of buyers requirements

3. Enhanced value for supply security and geographic diversification

  • This is especially important given geo-political events impacting gas markets

Mozambique LNG understands the importance of being driven by a deep understanding of what our buyers require, and we are working hard to demonstrate a competitive value proposition to our buyers.

Gastech Insights: What are Mozambique LNG’s plans to contribute to ensure stable energy supplies in the long term?

Rajnish Goswami: Our LNG project has the flexibility to accommodate future growth via multiple expansions. The project initially will source natural gas from a subsea reservoir that lies entirely within Offshore Area 1, the Golfinho-Atum reservoir, which contains natural gas resources sufficient to support the proposed initial two-train onshore infrastructure development. Each of these two trains will produce about 6 million tonnes of LNG per year.  Once we sanction our initial 2-train development, we have sufficient resources to consider further expansion given the tremendous scale of our discoveries.  Mozambique is very well placed to become a major global LNG supplier with more than 50 MTPA of potential capacity creation over time.

We believe Mozambique LNG, given its central location, large resource base, and competitive costs, is one of the best options for buyers seeking a diversified and flexible supply source.

In addition, our project will also provide a stable long-term supply of energy for the domestic market in Mozambique. As part of our commitment to the Government of Mozambique we will provide up to 400 MMscf/d of natural gas. This will occur in two phases: the first begins with initial production from our Golfinho/Atum developments and includes 100 MMcf/d at a mutually agreed upon price; and the second phase occurs over time with additional certified reserves and agreement on commercial terms, and will include the additional 300 MMcf/d.

Gastech Insights: What are your views on the current gas pricing and what does it mean for Asia?

Rajnish Goswami: While in the short term the supply of LNG is adequate, the LNG business is characterised by long lead times and a slowdown in FIDs since 2015. Most external commentaries believe by 2022/2023, the market will require new supplies and buyers may again encounter tighter market conditions

Gastech Insights: With today’s market becoming increasingly accustomed to spot buying, what kind of contracts do you expect to see in the future of the Asian LNG market?

Rajnish Goswami: While recent contracts in the market show a trend for shorter durations, strategic buyers recognize that new LNG supplies will only come online if new projects secure a certain minimum level of offtake commitment and for a duration commensurate with the level of investments required.  Lenders still require long-term bankable SPAs to finance projects although innovations from a technical and commercial perspective are leading to some interesting new concepts and developments. Some buyers are also keen on more gas indexation in contracts, but these buyers also understand that gas indices are still very much affected by developments native to the indices’ origin (e.g. HH very much affected by gas dynamics in US, NBP or TTF by gas dynamics in North West Europe etc.) and risks associated with these indices are also important to comprehend.

Many of our potential buyers are still interested in oil indexation as Liquidity and depth of oil markets gives them confidence in managing their risk and exposure.

Gastech Insights:  You are speaking at this year’s Gas Asia Summit – What would you identify as the main benefit of the event?

Rajnish Goswami: The Gas Asia Summit is an extremely well run event which attracts significant interest from global gas players. The Summit provides an excellent opportunity to interact with senior level policy makers; government representatives, buyers and other stakeholders in the gas and LNG business globally.

The conference provides a great opportunity to learn and share experiences with industry experts on these themes, which are important in increasing the role of gas in the energy mix and ensuring a cleaner and lower carbon energy mix globally.

Share your insights and join the conversation: In Asia, what sort of LNG contracts do think we will see in the next 10 years? Leave your comment below. 

Speaking at the Gas Asia Summit this October on "Supplier: Current and emerging suppliers on global gas and LNG trade", hear Mr Goswami and many more expert speakers discuss the key industry topics. View the complete conference programme and book your place today. 

Image courtesy of Anadarko Petroleum Corporation