China aims to turn Mozambique into a centre for natural gas exploration

13 April 2015

China aims to turn Mozambique into a centre for natural gas exploration, according to Portuguese researcher Gustavo Placido dos Santos, who notes the East African country has a lot to gain from Chinese involvement in natural gas exploitation.

Mozambique has one of the world’s largest recently discovered natural gas reserves and is starting to receive the first investments at a time when the difficult economic situation in the raw materials market is leading to postponement of some projects, in addition to some political instability in the country.

In an analysis for the Portuguese Institute of International Relations, Gustavo Placido dos Santos argues that Mozambique is a central commitment for China, which makes the country’s stability a concern.

“On the one hand natural gas exploration in Mozambique will have much to gain from China’s involvement, and on the other, it is in Beijing’s interest to secure new supplier markets, amongst which Mozambique is considered one of the most desirable,” said the researcher.

“The dynamic of Beijing’s strategic shift in relation to Africa, and the need to defend its interests and investments, may be a key factor in ensuring stability,” he said.

China ranks as one of the major future markets for Mozambican natural gas, with its state oil companies taking stakes in companies responsible for natural gas operations.

Sinopec has 20 percent of a concession in the Rovuma basin and the China National Offshore Oil Corporation (CNOOC) has been identified as interested in buying part of the same concession, operated by Italy’s ENI.

ENI originally had a total 70 percent stake, but sold 20 percent to Sinopec, in order to drive investment resources and increase China’s interest in natural gas production.

Mozambique’s government has estimated that to date over 75 trillion cubic feet of natural gas have been found in Area 4 and more than 95 trillion cubic feet of natural gas in Area 1.

Asia is now considered the only market capable of monetizing the investments already made and due to be made in future production of liquefied natural gas in Mozambique, in direct competition with Qatar and Russia.

Researcher Loro Horta said in a recent article that China is rapidly asserting itself “as the most important diplomatic and economic player in Mozambique,” investing millions on a “no questions asked” basis. (macauhub/CN/MZ)