Aug. 30 (UPI) -- Drilling services company Baker Hughes said it landed a contract that could help establish Mozambique as a major player in the liquefied natural gas market.
Baker Hughes, a division of General Electric, said it secured a contract from Italian energy company Eni for the Coral South floating liquefied natural gas project, the first project ever for natural gas offshore Mozambique.
"Coral South LNG is an enormously important development for Mozambique and the region, the first new-built FLNG facility to be installed in Africa and one of only a small number in the world today," Rod Christie, the president for process solution at the services company, said in an emailed statement.
The contract is the second for the company this year. It signed two five-year contracts in June with a regional subsidiary of Eni to provide equipment for offshore developments tied to Mozambique's gas assets.
Eni in 2015 discovered natural gas in a well in an area off the Mozambique coast thought to hold 85 trillion cubic feet of gas in place, adding it was eager to help the country become a hub for LNG exports to Asian economies. In early June, the company launched the implementation phase of its Coral South LNG project, a floating facility drawing in the gas reserves discovered by the company in the Rovuma basin in deep waters.
After lower crude oil prices last year crimped investments for oil and gas companies, the second contract for Baker Hughes shows capital streams are flowing toward new operations. While crude oil prices are low relatively speaking, the price for oil has been more or less stable for most of the year at around $50 per barrel for the global benchmark, Brent.
Total capital spending for the LNG project is estimated at $7 billion. For Mozambique, the offshore facility could provide economic stimulus. The International Monetary Fund said the nation's economy faltered last year, but should grow this year in part because of a surge in coal production exports. The IMF warned, however, that challenges remain and the government needed to take "urgent" action to strengthen its financial position.