The slow progress in bringing the LNG projects online has so far done little, however, to improve its economic situation, particularly given that Mozambique defaulted on loans worth US$2 billion ($2.7 billion) in 2017.
Attacks carried out by the Ahlu Sunna wal Jama’a group could be another potential source of further delays. First emerging in Cabo Delgado Province in 2015, the group seeks to impose Islamic law in the region.
Mainly consisting of jobless youths from poverty-stricken rural areas, Ahlu Sunna wal Jama’a carried out 20 attacks in the first four months of 2018 alone.
The group poses a significant threat to the security of LNG projects in the area worth US$30 billion ($40.4 billion), as well as increasing the risk for investors. US-based company Anadarko was forced to evacuate staff from a LNG plant on the Afungi Peninsula, after a number of attacks recently killed 39 people.
While the presence of the Islamist group may threaten the development of LNG projects in the north, the wealth created from projects in other areas could potentially exacerbate existing socio-economic inequities, further emboldening such groups in the future.
U.S. petroleum company Anadarko has placed staff working on a liquefied natural gas (LNG) plant in northern Mozambique under “lock-down” due to the threat from suspected Islamist militants in the area, a regional security consultant said on Tuesday. Anadarko, which is looking to raise a record $14-$15 billion for the plant, said last week it was monitoring the situation after a spate of beheadings and kidnappings but declined to comment on specific security issues.
Besides Anadarko, Italian energy giant Eni is piling into northern Mozambique to develop gas fields in the offshore Rovuma Basin, believed to hold 85 trillion cubic feet of natural gas – enough to supply Germany, Britain, France and Italy for nearly two decades.
The Mozambique LNG Project is emerging as a leader in the global LNG industry, with approximately 75 trillion cubic feet (Tcf) of estimated recoverable natural gas discovered to date in Mozambique’s Offshore Area 1. In cooperation with the Government of Mozambique, Offshore Area 1 participants are working to advance an initial two-train LNG development with significant expansions expected in future years.
A boom in the growth of the LNG industry in Mozambique could have a number of negative outcomes. If the Mozambican Government does not concentrate its efforts on strengthening its institutions and diversifying the economy, the growth of the LNG sector may only further divide Mozambican society. With nearly 50 per cent of Mozambicans still living in poverty, more than 50 per cent of adults aged 20-30 unable to read and only eight per cent of rural households having access to electricity, the equitable distribution of LNG-derived income could have a significant effect on poverty reduction in Mozambique.
If the wealth acquired from mining and natural resources is kept highly concentrated in élite circles, however, the development of the Mozambican LNG industry could have a divisive effect and further exacerbate the socio-economic inequalities.
The development of liquefied natural gas (LNG) projects in northern Mozambique is expected to move the country closer to becoming a global LNG player. Since the discovery of enormous natural gas fields off the coast of Mozambique in 2010, companies such as Anadarko Petroleum Corporation and Eni SpA have sought to advance the production of LNG.
In 2012, the discovery of the Coral Field, a gas field off the coast of Cabo Delgado Province, sparked the progression of a number of LNG projects in Mozambique. Working in conjunction with the Mozambican Government, the Italian oil giant Eni has begun developing a floating liquefied natural gas (FLNG) facility in Area 4 of the Rovuma Basin. Launched by President Felipe Nyusi on 1 June 2017, the US$8 billion ($10.8 billion) project is the first of its kind in Africa and will be able to liquefy more than 3.3 million tonnes of gas per year by the time it is operational in 2022.
LNG projects such as Coral South FLNG have the potential to transform the economy and society of Mozambique. The reserves of the offshore Rovuma Basin, shared by Tanzania and Mozambique, could supply domestic demand for up to 5,000 years. With domestic reserves of up to 180 trillion cubic feet of gas, the development of such large-scale LNG projects has the potential to significantly boost the economy of one of the poorest countries in Africa.
The Empresa Nacional de Hidrocarbonetos (ENH) is the state-owned energy company responsible for commercialising gas reserves in Mozambique. ENH has at least a ten per cent stake in all LNG projects throughout Mozambique. Despite having to develop LNG infrastructure from scratch, the Mozambican Government expects to receive US$49.4 billion ($66.5 billion) in state revenue over the lifetime of various LNG projects, as a baseline scenario. With the first projects expected to start production in 2022, some analysts believe that Mozambique could eventually become the third-biggest LNG producer in the world, behind Qatar and Australia.
Mozambican President Filipe Nyusi condemned a spate of attacks on villages in the gas-rich north of the country and called for the perpetrators to be “neutralized.” The attacks have raised risks for investors developing more than $30 billion of gas projects off the coastal Cabo Delgado province. Researchers said the raids have been carried out by a group known as Ahlu Sunnah Wa-Jama, composed of local people as well as citizens of neighboring Tanzania, which wants Islamic law introduced in the region.
The insurgents are a “group of malefactors, allegedly with religious or social motivation,” Nyusi said in his first public comments about the violence. Human Rights Watch, the New York-based advocacy group, says the attacks have left at least 39 people dead and forced more than 1,000 others to flee their homes since May.
The Ahlu Sunnah Wa-Jama insurgency comes just as Nyusi is finalizing a permanent peace deal with the country’s biggest opposition party, which has been delayed by the May death of Afonso Dhlakama, the leader of Resistência Nacional Moçambicana, or Renamo. The opposition’s armed wing resumed attacks in 2013, and sporadic fighting continued until Nyusi and Dhlakama agreed to a truce in 2016.
Ossufo Momade, Renamo’s interim head, has said he’s committed to the peace process. “Disarmament, demobilization and reintegration are the sine qua non for a democratic, stable and peaceful country,” Nyusi said. “There is no alternative to disarmament, demobilization. And it should start already.”
Mozambique is an African country and home to a population of 29 million people. Its name came from its first known ruler, a Muslim Arab emir named Mussa ibn Bique. The Portuguese started referring to the region as the “Lands of Mussa ibn Bique” and from there the name was simplified to Mozambique.
Anadarko-led Mozambique LNG is an emerging leader in the global LNG industry working to develop the first onshore state-of-the-art LNG facility in Mozambique.
The media reported during May 2019 that the government of Mozambique has approved the development plan for the Rovuma LNG project, according to Mozambique Rovuma Venture. This will produce, liquefy, and market natural gas from the deepwater Mamba fields in the Rovuma basin in the Area 4 block offshore Mozambique, two of which straddle the boundary with neighboring Area 1.
Given the increasingly crowded LNG market, Mozambique must minimise delays in developing its projects if it is to gain from the existing dynamics of the market.