Natural Gas Development in Mozambique
This article has been dedicated to study Mozambique, considering that is a key country for Africa and the world due to its large natural gas reserves and its potential to become a key natural gas exporter. Likewise, it is also important to consider that Mozambique is a vulnerable country with a political, economic and social context that represents a big challenge for the future of that country and the region as well.
Natural gas sector
Mozambique counts with significant natural gas reserves, 2,840 million of cubic meters situates the country with the third largest reserves in Africa after Algeria and Nigeria, and the twelfth in the world, according to OPEC figures [1]. Rovuma Basin contains large volumes of natural gas and it is an area shared between the north of Mozambique and the south of Tanzania.
The attractive zone has been the focus of international companies and represented an opportunity to drive the local economy forward. Important energy companies lead projects in Mozambique nowadays, such as, ENI, Exxon Mobil, Total Energies and CNOOC.
Firstly, those companies obtained concessions issued by the National Petroleum Institute of Mozambique to develop exploration activities in Rovuma Basin. Secondly, exploitation contracts are negotiated once the discover is achieved [2]. The Ministry of Mineral Resources and Energy launched tenders to attract investments as part of the policies to encourage the economic development in the country.
Regarding the National Company of Hydrocarbons, it is the state-owned company and participates as stakeholder in explorations and production operations and it is also engaged in several local projects in partnerships with private companies to contribute to developing the Mozambican energy domestic market [2].
International Companies
Firstly, ENI leads offshore developments. Firstly, ENI is carrying out the Rovuma LNG project since 2019, that consists of the production of three fields in the Mamba complex and the construction of two onshore LNG trains expected to produce 7.6 million tons of LNG per year. The project would also contribute to the local market providing 17,000 tons of LPG [3]
Secondly, the Italian company has been also working carrying out the Coral South or Coral Sul FLNG project since 2016. The project is aimed to produce 3.4 million of tons of LNG per year. The Coral field contains reserves estimated by 500 billion of cubic meters. according to ENI [4].
In 2022, Coral South project became a historical landmark for the energy industry in Mozambique, the president of the country announced the first cargo of LNG produced from Coral South departed from the platform to Europe, the vessel was the “British Sponsor” owned by BP. Mozambique is expected to become an important LNG supplier in the world. [5].
Last March, CNOOC and the Mozambican government finalized negotiations of the contracts to explore and produce gas of five offshore blocks in Mozambique: A6-E, A6-G, A6-D, S6-A and S6-B. The Chinese company had won the 6th International tender launched by the Ministry of Mineral Resources and Energy in 2021. [6]
Total Energies led the Block 1 with the Mozambique LNG onshore project, which consists of six LNG trains, the first two trains obtained the final investment decision (FID) in 2019. However, insurgent attacks in the area forced the company to stop the operations and withdraw all the staff from 2021, expecting to restart the project in 2024 [2].
Exxon Mobil has been facing a similar situation. The company is leading activities in the Block 4, carrying out the Rovuma LNG project, which is aimed to build two LNG trains, expecting to award the FID in 2025. However, violence in the area has also negatively impacted operations of Exxon Mobil, although the company has not completely stopped its operations in Mozambique. [2]
Certainly, companies that work onshore have faced security problems in Cabo Delgado zone. As a result, the companies been actively talking to the Mozambican government requesting security, which has been a challenging task for Mozambique. [2]
The conflict zone – Cabo Delgado
In 2017, insurgent attacks emerged in Cabo Delgado, located in the North of Mozambique, and continued the following years, displacing thousands of people and creating a humanitarian crisis. Considering that Mozambique is a country with a complex political, economic and social situation, and showed improvements in 2023, still have poor wealth and health indicators [8], thus, the development of any conflict deepens inequalities and encourages more conflicts.
What we officially know is that the attacks were perpetrated by the group Al Sunnah, which was associated to the jihadi group ISIS. It not only did call the attention of the Mozambican government, but also the international community, since it would represent the expansion of violence in the region. [9]
Nevertheless, some analysts affirm that the essence of the conflicts is the presence of international companies controlling fossil fuels and mining activities, which are encouraging people displacements from lands used to develop the industrial projects. The same situation occurs with lands for mining and agriculture. Likewise, the environment is also affected in those areas, as well as, in the areas surrounding and thrive violence in those territories. [10]
In any case, due to the scalation of violence, in 2021, Mozambique Defence Armed Forces (FADM) received support from, firstly, the Rwanda Security Forces and, secondly, the Southern African Development Community (SADC) mission. SADC troops came from South Africa, Angola, Democratic Republic of Congo, Lesotho, Malawi, Tanzania and Zambia. [9]
Once the international support arrived in Mozambique, control and stability in the conflict zone were progressively recovered by the security forces. Nonetheless, current budget limits forced the country to stop cooperation from SADC, whose troops would gradually start leaving the country from April 2024. While Rwanda remains contributing to guarantee security, the Mozambican security forces have the challenge to be prepared to expand their participation to deal with conflicts and peacebuilding. [9]
Reconstruction plans
In 2021, to address the impacts of the conflicts and crisis, the government prepared the “Cabo Delgado Reconstruction Plan” and the “Integrated Resilience and Development Program for the North of Mozambique “.
The Cabo Delgado Reconstruction Plan (300 million USD) will be implemented in six districts: Palma, Nangade, Mocímboa da Praia, Muidumbe, Macomia and Quissanga. Since gas industry infrastructure and services are mainly located in Palma and Mocímboa de Praia, 65% of the budget would be allocated in both districts [11]. It is worth noting that the government has recently assured financing of 131 million USD (only 44%), mainly from the World Bank, as well as, from the United Nations, Total Energies and State Budget. [12]
Regarding the Integrated Resilience and Development Program for the North of Mozambique (2.5 billion USD), it consists of the reconstruction and recovery of three provinces in five years: Cabo Delgado, Niassa y Nampula, in which population is over 13 million of people (by 40% of total inhabitants). This plan is also based on international financing from the Word Bank, the United Nations, the European Union and the African Development Bank. [13]
The Mozambique Mining Energy Conference 2024
The Mozambique Mining Energy Conference (MMEC) took place in Maputo from 2 to 3 May 2024. The event was in line with the political view to develop Mozambican natural resources sector to achieve economic growth in the country and the region [14]. One of the most important achievements has been the Exxon Mobil and Eni assured to restart Rovuma LNG project in October 2024. [15]
Similar events had been celebrated in previous years under the premise that Mozambique has a great potential to become an important energy supplier, in line with the concept of energy transition and it can also be an opportunity to develop the country, reaching the energy trilemma: energy equity, security and sustainability.
Challenges for the development
The political, economic and social situation in Mozambique adds complexity to the fact of developing the country and, in particular, the energy industry. Mozambique would have to exploit its potential and overcome its restrictions in the middle of economic and social local needs, the interest of local political groups, international political and economic interest.
Mozambique is still a vulnerable country. From one side, the political system, the institutional weakness and corruption reduce the possibility to strengthen the social and productive development processes. Municipal Elections in 2023, could reflects the level of control by the current government, which is considered authoritarian that controls the Mozambican politics [16].
According to the World Bank, the country also faces high level of poverty, lack of health and education equally delivered in the country, low-skill labor force, low-skill women, population depending on agricultural subsidies, as well as, vulnerability to international price fluctuations [17]. That context becomes fertile ground for instability and violence that could thrive conflicts.
In 2024
The 2024 calendar for Mozambique is crucial for the next years. Internally, the national security forces will take more responsibility for the control and security of the country, without the presence of SADC troops. Additionally, Total Energies is expecting to resume its projects, as well as, Exxon Mobil and its partners are also waiting for October to resume operations in Rovuma. In addition to that, in October will also take place the presidential and legislative elections in Mozambique. We will see what happens...
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Sources:
[1] The Annual Statistical Bulletin by OPEC (2023)
[2] https://www.trade.gov/country-commercial-guides/mozambique-oil-gas-0
[3] https://www.ENI.com/en-IT/actions/global-activities/mozambique/rovuma-lng.html
[4] https://www.ENI.com/en-IT/actions/global-activities/mozambique/coral-south.html
[7] https://aimnews.org/2024/02/23/exxonmobil-manager-claims-security-improving-in-cabo-delgado/
[10] https://www.cidse.org/es/2023/10/13/extractivism-and-corporate-abuse-in-mozambique/
[11] https://www.cipmoz.org/wp-content/uploads/2022/05/Cabo-Delgado-Reconstruction-Plan.pdf
[14]
https://mmec-moz.com/
[16] https://africacenter.org/spotlight/2024-elections/mozambique/
[17] https://worldpopulationreview.com/countries/mozambique-population