The African country of Mozambique has always been one of the poorest in the world. But the key word is “was” because there is a strong possibility that the situation will change in the coming years, when Mozambique begins to profit from the export of its huge gas reserves, as it turns out.
The Institute for the Development of Fuel and Energy Technologies (IRTTEC) tells how Mozambique plans to develop, relying on the gas sector.
In early November 2022, the President of Mozambique delivered a historic speech. On that day, he announced the departure of the first liquefied natural gas (LNG) cargo ship to Europe. The vessel was owned by BP and departed from the Coral Sul floating facilities operated by Eni SpA.
The Coral Sul project, located in the Rovuma Basin offshore Mozambique, includes an LNG plant with a capacity of 3.4 million tons per year. By the way, this is a third of the total volume of imports to the UK.
This is how Mozambique officially began exporting its vast reserves of liquefied natural gas. Quite possibly, it was on this day that the transformation of the country into one of the ten main LNG producers in the world began. The authorities expect to attract 120 billion euros of investment in the coming years. And this is just the beginning.
The story began in 2010, when Anadarko Moçambique, a subsidiary of Anadarko Petroleum, discovered a huge natural gas field in the Rovuma Basin off the coast of northern Mozambique. Over the following years, world energy leaders gathered in the province of Cabo Delgado, where the basin is located, such as the French TotalEnergies SE, which bought Anadarko, the American ExxonMobil and the Italian ENI. It was the last two who got the most “tidbits” in the form of the most profitable concessions.
Avoid “Dutch disease”
Already 4 years after the discovery of the field, in 2014, the Minister of Finance of Mozambique, Manuel Chang, announced large-scale plans to use future profits. “Revenues from this huge natural gas field will enable the Mozambican government to invest in energy, tourism and infrastructure,” he said. Mozambique, which has a long maritime border, also plans to develop fisheries.
The Mozambican authorities immediately warned that they were afraid of the “Dutch disease”, as they call the decrease in the efficiency of the country’s economy due to an increase in the export of raw materials. And they clarified that all proceeds will go to “diversification and reduce inequality,” as Chang himself said.
But Africa is Africa, and in this region there is always one significant brake: political instability. Four years ago, Treasury Secretary Chang, who voiced grandiose energy plans, was detained in South Africa in 2018 at the request of the United States on charges of securities fraud.
In addition, the rapid onset of a bright future is constantly overshadowed by armed conflicts. For example, in 2017, Islamist militants took control of a large part of the Mozambican province of Cabo Delgado in the north of the country. The fighting then took place very close to the LNG plants, which prompted TotalEnergies to recall all personnel. But with the help of the military from Rwanda and other countries, the issue of the rebels was resolved. Most likely temporarily.
The authorities, meanwhile, are doing everything possible to solve the problem with the Islamists. One of the latest measures was a bill passed by Parliament on December 22, 2022, legalizing the participation of local militias in the fight against jihadists in the northern province of Cabo Delgado. The military acknowledged that the Mozambican army alone is unable to cope with the jihadists and needs the help of the people. Which, however, is itself interested in the fact that the conflict was extinguished and LNG production began to spin with greater force.
Through thorns to wealth
Nevertheless, despite these troubles, the interest of foreign companies does not fade away. For example, BP plans to build an LNG pipeline with a capacity of 30 million tons by 2030.
It is likely that against the background of the events of 2022, the pace of investment in Mozambique will increase. This year, European gas storages are filled to capacity, but what will happen next year, in which the IEA has already predicted an increase in gas shortages in Europe?
There is also growing interest in Asia. For example, in December, South Korean Prime Minister Han Dak-soo met with Mozambican President Filipe Jacinto Nyusi and discussed ways to expand cooperation in energy and resources. South Korean companies Samsung Heavy Industries and the Korean Gas Corporation (KOGAS) are already operating in Mozambique today.
Mozambique is expected to generate about $100 billion in gas revenues over the next 25 years. This is about five times the country’s current GDP. But will the country be able to use this money as efficiently as possible? In addition, burdened with constant internal conflicts. If so, then the impoverished people of Mozambique will benefit both economically and socially. If not, then another explosive region may await Africa, where the eternal struggle for natural resources will continue, and again the people will suffer.
Mikhail Vakilyan
Correspondent of IRTTEK
