The Chief Executive Officer of Italian energy company ENI, Claudio Descalzi, has announced an initial investment of around ten billion US dollars in developing the Coral South gas field in Area Four of the Rovuma Basin, off the coast of the northern Mozambican province of Cabo Delgado.

Speaking to the media here Monday after meeting Mozambican Prime Minister Carlos Agostinho do Rosario, he said the Coral South project would involve the drilling of six sub-sea wells which would be linked to a floating platform where liquefied natural gas (LNG) will be produced.

ENI says that the FLNG platform would be able to produce 3.3 million tonnes of liquefied natural gas a year (equivalent to about five billion cubic metres).

The Coral South field, discovered in May 2010, is entirely located inside Area Four, and the gas reserves in the field are estimated at 16 trillion cubic feet. Other gas fields straddle Area Four and the adjoining Area One, and are therefore subject to negotiation between ENI and the operator of Area One, the American company, Anadarko. The total known reserves of gas in Area Four are 85 trillion cubic feet.

Last month, ENI and its partners in the Area Four consortium signed an agreement with BP for the sale of all liquefied natural gas produced from the Coral South field, over a period of 20 years. This is the first agreement ever signed on the sale of Mozambican LNG.

Descalzi visited Mozambique after the ENI Board of Directors approved the investment last week. He said the Final Investment Decision would become effective “after the project and its financing are approved by the other partners in Area four”. This process is now being finalized.

“We came here to inform the government officially that we have approved the investment plan for the first phase of the project to exploit the gas reserves in the Coral South field. We also talked about the second phase of the project and all the work that is being undertaken in Area Four,” he said.

ENI is the operator and controls a 50 per cent indirect interest in Offshore Area Four owned through ENI-East Africa, which holds 70 per cent of the concession. The other 20 per cent held via ENI-East Africa belongs to the Chinese company CNPC. Three other partners, with ten per cent each, are Kogas of Korea, Galp Energia of Portugal, and Mozambique’s National Hydrocarbon Company, ENH.

With approval already guaranteed from ENH, ENI is now just awaiting the go-ahead from its Chinese, Korean and Portuguese partners. As soon as they gave the green light, “we shall start developing the project”, said Descalzi.