The Ruvuma-Rufiji gas basin in East Africa holds significant potential to meet the increasing global demand for liquefied natural gas (LNG). Despite its substantial reserves and advantageous proximity to key markets, development in the basin has been hindered by security challenges in Mozambique and regulatory hurdles in Tanzania. These obstacles could delay progress, even as LNG demand is projected to rise sharply by 2030.
Global LNG Demand Outlook
BP's Energy Outlook (July 2024) predicts that global LNG trade volumes will grow by 43%, reaching 778 billion cubic meters (Bcm) by 2030, up from 543 Bcm in 2022. Dominated by the United States, Australia, and Qatar, LNG exports from these countries accounted for 60% of global capacity in 2023, with a combined export capacity of around 257 million metric tons per annum (MMtpa). By the end of the decade, the U.S. and Qatar are expected to add 150 MMtpa in feedstock capacity, fueled by ongoing U.S. LNG infrastructure expansion (84.1 MMtpa) and QatarEnergy's North Field project (65 MMtpa).
A Case for Development in the EARR Basin
The anticipated growth in LNG demand strengthens the case for advancing stalled gas projects in emerging regions like the East African Ruvuma-Rufiji (EARR) basin. With reserves estimated at 165.7 trillion cubic feet (Tcf) and a strategic location close to South Asian markets, Mozambique and Tanzania could become key players in global LNG production. However, the question remains whether the basin can overcome its challenges to deliver on its promise.
Bottlenecks in Tanzania and Mozambique
In Tanzania, the $40 billion Tanzania LNG project, which plans to source gas from Shell's Blocks 1 and 4 and Equinor's Block 2, has been delayed by prolonged negotiations over fiscal terms and high domestic supply obligations. Meanwhile, Mozambique's undeveloped reserves face a different set of hurdles, primarily the ongoing insurgency in Cabo Delgado province.
For example, TotalEnergies declared force majeure on its 13-MMtpa Mozambique LNG project, delaying its Golfinho-Atum field production to 2028-nearly a decade after the final investment decision (FID). Similarly, ExxonMobil's Rovuma LNG project has been delayed as it relies on shared infrastructure with TotalEnergies. However, ExxonMobil has adapted its plans, reconfiguring its project to a modular 18-MMtpa facility with a focus on reducing greenhouse gas emissions.
Recent Developments and Promising Signs
Despite these issues, there have been some notable successes. Eni's Coral Sul FLNG project, which began production in 2022, demonstrated the feasibility of large-scale projects in Mozambique. Confidence in improved security in Cabo Delgado has led to renewed activity, with ExxonMobil awarding front-end engineering design (FEED) contracts for its LNG plant. Technip Energies and JGC were selected in mid-2024 for a 16-month FEED phase, and McDermott, Saipem, and CPECC secured similar contracts later that year.
Meanwhile, in Tanzania, progress has been slower but not stagnant. ARA Petroleum and Aminex received a 25-year development license for the Ntorya onshore field, which is expected to start production in 2026. Additionally, Maurel & Prom (M&P) has invested in expanding its Mnazi Bay project, which currently accounts for 50% of Tanzania's gas production.
Production and Drilling Projections
By 2030, the EARR basin is projected to produce 327,000 barrels of oil equivalent per day (boed), marking a 184% increase from 2023. Mozambique is expected to lead this growth, with TotalEnergies' Golfinho-Atum field and Eni's Coral Norte FLNG project contributing significantly. However, the potential for delays remains a concern, as only one major project has passed sanctioning so far.
Drilling activity is expected to increase, with approximately 50 wells planned to support Mozambique's LNG projects. Onshore drilling in Tanzania will remain limited, though three wells are planned for M&P's Mnazi Bay field in 2025.
Long-Term Outlook
Beyond 2030, the EARR basin could see further growth driven by international energy companies' continued interest and new licensing rounds. In Tanzania, Shell and Equinor have proposed a $42 billion LNG project, while CNOOC has expressed interest in developing a floating LNG project. Similarly, Mozambique has approved new concession contracts for exploration.
Conclusion
While the Ruvuma-Rufiji basin holds immense promise, its ability to meet global LNG demand depends on resolving security and regulatory challenges. Mozambique's government must address the insurgency in Cabo Delgado to facilitate project development, while Tanzania needs to improve fiscal terms to attract investment. With steady progress, the basin could contribute significantly to global LNG supply by the end of the decade, finally unlocking its vast potential.