Claudio Descalzi, chief executive officer of Eni SpA, poses for a photograph following a Bloomberg Television interview in London, U.K., on Tuesday, March 22, 2016. Eni is among oil producers to see profits wiped out amid the worst crude-market collapse in a generation. Photographer: Chris Ratcliffe/Bloomberg *** Local Caption *** Claudio Descalzi.

Eni SpA led a group that signed off on a $7 billion investment in a project to export natural gas from Mozambique.

The country’s President Filipe Nyusi and Eni Chief Executive Officer Claudio Descalzi attended a ceremony in the capital Maputo on Thursday to formally approve the Coral South liquefied natural gas project. Once built, the floating LNG plant, with a capacity of about 3.4 million tons a year, will draw gas from the Rovuma Basin where Eni made its first major Mozambique find in 2011.

“We’re finally transforming this resource into money,” Nyusi said. “We expect it will help us to bring the economy back to the performance of the last decade.”

The investment decision gives momentum to resource development in Mozambique, one of the poorest countries in the world, that’s also been struggling with a debt crisis. It failed to make an interest payment on a Eurobond in January, becoming the first African nation to default in six years.

“This is really good news for the government of Mozambique,” said Alasdair Reid, research manager for southern and east Africa at Wood Mackenzie. “It demonstrates that, despite ongoing credit issues, there is still enough belief in the investment climate for partners to raise finance and move projects forward.”

LNG Contract

BP Plc has a 20-year contract to buy all LNG production from the Coral plant, being developed by Eni in collaboration with Galp Energia SGPS SA, Korea Gas Corp. and Mozambique’s state-owned Empresa Nacional de Hidrocarbonetos. The group has ratified the final investment decision, Galp said in a regulatory filing Thursday.

Exxon Mobil Corp. in March said it will buy half of Eni’s stake in Area 4, offshore from northern Mozambique. While Eni will continue to operate the Coral floating LNG project and all the subsea wells and pipelines in the block, Exxon will lead the construction and operation of onshore liquefaction facilities.

The construction contract for the floating LNG unit was awarded to the TJS venture that includes Technip SA, JGC Corp. and Samsung Electronics Co., Galp said. First gas production is expected in 2022.

The group has secured $6 billion in financing from 15 banks, Eni’s Descalzi said at the signing ceremony. The remaining amount will be financed by the shareholders.

Saipem SpA also signed an offshore drilling contract with Eni which includes development of the Coral field, commencing in mid-2019, the company said in a statement.

Source: Bloomberg

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