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South Africa's Sasol abandons exploration blocks offshore Mozambique

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Sasol to relinquish blocks 16, 19 to state

Latest setback for country's gas industry

Three major LNG projects under development

London — South Africa's Sasol said July 6 it has decided to relinquish two licenses offshore Mozambique to the government in a new setback for the southeast African country's upstream sector.

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Sasol held licenses for offshore blocks 16 and 19 since 2005, but has now opted to hand back the licenses.

"Following an evaluation of the exploration potential of the blocks and an assessment of the report of the pre-feasibility phase of the Environmental Impact Assessment, Sasol has decided to relinquish its exploration license in Blocks 16 and 19 offshore Mozambique," it said.

Sasol carried out some deepwater exploration activities in the license areas, but relinquished the deepwater part of the license in 2013.

It kept the shallow water area of the license with a view to assessing the remaining hydrocarbon potential.

"Sasol will relinquish Blocks 16 and 19 in their entirety to the government of Mozambique and a withdrawal notification has been issued to the relevant Mozambican authorities," it said.

Sasol remains a key player in Mozambique with a stake in Eni's A5-A offshore block.

It also processes gas from the Pande and Temane gas fields at its Central Processing Facility and transports the gas to markets in Mozambique and South Africa.

Mozambique is best known for its huge offshore gas discoveries, which are set to transform the country into a major LNG exporter.

Over 30 million mt/year of LNG production capacity is in development, but the industry is under threat from an increasing Islamist insurgency, very low LNG prices and swingeing cuts in company spending.

ExxonMobil has said it is delaying final investment decision on the 15.2 million mt/year Rovuma LNG project, the biggest of three LNG projects under development in Mozambique.

It had been expected to begin operations in 2025, though that start date is now almost certain to be pushed back.

The two others are the Total-operated, 12.9 million mt/year capacity Mozambique LNG project -- expected to start up in 2024 -- and the Eni-operated, 3.4 million mt/year capacity floating Coral LNG project.

First LNG at Coral is expected in 2022.