This is an archived article that was published on sltrib.com in 2016, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.

Mozambique and Anadarko Petroleum Corp. are racing to tap gas from one of the biggest discoveries in decades as a global glut looms.

After making its initial discovery six years ago in the Rovuma basin off Mozambique's northern coast, Anadarko has yet to make a final investment decision on a $15 billion liquefied natural gas project. That decision may come this year as competition from U.S. and Iranian supplies intensifies in export markets, said state-owned partner Empresa Nacional de Hidrocarbonetos.

"Unless we speed the process, we could lose the opportunity," Omar Mitha, chairman of ENH, said in an interview at his office near the waterfront in the capital, Maputo. We are discussing with the government that this is the time "to get ready with all the contracts, the legal framework, the resettlement process," the former deputy minister said.

With the International Monetary Fund projecting total LNG investment of more than $100 billion in Mozambique and the possibility of supplying gas to the domestic market, the discoveries have the potential to help transform one of the world's poorest nations. While Woodlands, Texas-based Anadarko has joined oil majors in curbing investment as crude slumps, the company said on Tuesday that it hopes to conclude negotiations with the Mozambique government this year.

Friday's meeting of the Central Committee of the ruling Front for the Liberation of Mozambique will consolidate the power of President Filipe Nyusi, providing an enabling environment for LNG development in the country, according to a Feb. 3 note from Eurasia Group. Mozambique's longer-term trajectory over the next two years remains positive, Eurasia said.

Anadarko needs to finalize legal issues, including marine concessions that dictate ownership of the planned export jetty in Cabo Delgado province, and complete LNG offtake agreements before taking a final investment decision, John Peffer, the company's manager in Mozambique, said in an interview.

"The key is to finish the legal and contractual framework as quickly as possible as this is a critical element in providing project certainty and securing long-term economic value," Peffer said.

Anadarko, which owns 26.5 percent of the project, and its partners also need to get approval for resettling about 500 people at the project site, Peffer said. Displaced fisherman will be eligible for compensation, according to a draft of the plan. Despite pricing pressures as crude slumped to the lowest in more than a decade, the company remains confident about the prospects in Mozambique.

"The size of this asset, reservoir quality, distance to shore, proximity to the market, and continued progress with the government on the required legal and contractual framework will enable this project to differentiate itself and compete in today's LNG market," Peffer said.

Anadarko said on Monday that it plans to cut spending by almost half as it moves to recover from its worst year since spinning off from Panhandle Eastern Pipe Line Co. in 1986. The third-largest U.S. natural gas producer reduced its 2016 capital budget to about $2.8 billion, after reporting a net loss of $1.25 billion for the fourth quarter.

Anadarko and Eni in December agreed on a plan to develop adjoining areas in the northern Rovuma basin, targeting a combined 24 trillion cubic feet of gas. Mozambique has attracted international energy companies to exploit huge gas finds that could help turn the country into the third-biggest LNG exporter in a decade.

ENH is also a minority partner in a gas-to-liquids plant proposed by Royal Dutch Shell. The gas could be used for power plants, methanol and urea production, in addition to GTL, according to a study prepared for the government.

Should a final investment decision be taken, the state- owned company would need to add lawyers and accountants, more than tripling its 160 employees, he said.

"That partnership is important because it's an opportunity for ENH to go into the downstream industry and occupy the space along the value chain," Mitha said. "We'll have to reshape our strategy, our plans, and fiercely fight for tapping new resources as well."

A feasibility study has been completed for the plant, which would be a "foundation project" for the domestic gas industry in Mozambique, according to a spokesman for Shell. Discussions are ongoing between Shell, ENH and the Mozambican government on the findings of the study, he said.