Mozambique due to become oil producer in 2014

6 January 2014

Mozambique is due this year to become an oil producing country and significant progress is also expected to be made in natural gas and coal production, according to the Economist Intelligence Unit.

A small oil discovery next to the Temane gas field, in Inhambane province (south), will allow South African petrochemical company Sasol to launch oil production this year, said the EIU’s latest report on the Mozambican economy, to which Macauhub had access.

“The oil field is the first to produce oil commercially in Mozambique, where so far there have only been viable natural gas discoveries,” the report said.

The project will produce around 2,000 barrels of oil per day, which is a small amount commercially-speaking, but makes it possible to “diversify Mozambique’s export base,” it noted.

As well as this, Sasol’s representatives have already said that oil reserve estimates may be increased, as exploration activities are already underway in the area.

According to the Oil and Gas Journal, Mozambique has around 4.5 trillion cubic feet of proven natural gas reserves, but until the beginning of last year had no oil reserves at all.

The country has extensive onshore and offshore sedimentary basins containing natural gas, most of which has yet to be explored, as well as significant coal reserves, which are considered to be the biggest in the world.

William Telfer, an oil and gas specialist told DW Africa that the discovery “is very viable” and that 100 similar wells were the equivalent of Angola and Nigeria’s production.

“It’s not small, it’s very good. And we are soon going to hear about new discoveries that will increase the amount of wells,” said the specialist.

“Gross domestic product will increase. We have an excellent Finance minister and excellent deputy minister. A very strong staff. Mozambique is prepared to start exploring large quantities of oil,” he said.

Despite the announcement, the Economist kept its estimates for economic and export growth in the 2014-2018 period unchanged, as they already take into account substantial investments in the extractive industries and greater weight of exports.

Along with this Sasol is increasing production as its gas fields in Pande and Temane which is “welcome news for the nascent Mozambican energy sector,” and a “sign of confidence,” from an important foreign investors at a time that is sensitive in terms of both politics and security.

Sasol is investing in a number of areas, including increasing the capacity of its gas pipeline to South Africa (US$184 million) and a gas-fired power plant at the Ressano Garcia border (US$246 million).

The EIU for this year points to growth of the Mozambican economy of 6.5 percent, rising to 7.3 percent this year and 7.6 percent in 2015.

The industrial sector is expected to make the biggest contribution to economic growth over the next two years: 9 percent growth in 2014 and 14 percent in 2015. (macauhub)

MACAUHUB FRENCH