Mozambique approves development plans for Eni’s Coral FLNG Project

On 24 February, Mozambique’s Council of Ministers approved development plans for Eni’s Coral FLNG project on Area 4. The project will involve a 3.4 mmtpa floating facility, which is 0.9 mmtpa larger than previously proposed. With this approval secured, Coral is on track to be sanctioned in 2016. However, taking FID in a US$30/bbl world will be tricky. While sanctioning it will be a bold move, Coral will be an expensive project. The EPC contractor has not yet been selected but we expect LNG EPC costs to fall. As such, there is still scope for Eni to drive down costs and achieve better returns on the project. In addition, Eni will need to secure project financing for the FLNG vessel, something that has never been done before.