Mozambique may become a large African natural gas producer

31 October 2011

London, United Kingdom, 31 Oct – Mozambique may soon become one of the main producers of natural gas in Africa due to natural gas reserves found in the “Camarão” well, according to the Economist Intelligence Unit (EIU).

Located in the Rovuma Basin, on the coast of Cabo Delgado province, the feasibility of the “Camarão” well was confirmed by its operating company, Anadarko Petroleum, with the discovery of new large natural gas deposits estimated at 10 trillion cubic feet, according to the latest EIU report on Mozambique.

Following the discovery, the EIU said, the estimate of the natural gas reserves will be “substantially higher” than the 12 trillion cubic feet previously identified in the whole area.

Excluding Nigeria, which has natural gas reserves of an estimated 187 trillion cubic feet, total proven reserves in sub-Saharan Africa totalled 41 trillion cubic feet at the end of 2010, according to BP.

“This means that Mozambique can soon become one of the main producers in sub-Saharan Africa,” noted the EIU.

“As the state oil and gas company, Empresa Nacional de Hidrocarbonetos, has a 15 percent stake, which means it is not responsible for initial exploration costs, the benefit to the public coffers could be significant as soon as production begins,” it said.

After the discovery Anadarko ordered feasibility studies for development of a liquid natural gas (LNG) unit in the area and engineering projects can go ahead at the beginning of 2013.

The unit can start production in 2018, according to the EIU, and become, “the biggest capital investment in Mozambique to date, establishing hydrocarbons as large new sector of the economy.”

Currently, the only gas fields in production in the country are located in Inhambane province, to the south, from where the gas is exported along a pipeline to South Africa.

Concessions on exploration areas along the coast of Cabo Delgado were granted by the government in 2008 and involve several multinational oil companies such as Petronas of Malaysia, which is now launching its drilling programme.

The EIU forecasts that the Mozambican economy will post growth of 7.3 percent this year, accelerating to 8 percent in 2012 and 8.5 percent in 2013.

The economy will start to feel the effect of the start of coal exports from the country’s largest coal project in Moatize, run by Brazilian company Vale.

The first coal shipment, of 35,000 tons, left Tete on 9 August on the recently rebuilt Sena railroad headed for the port of Beira, from where it was shipped to its final destination.

However, the EIU noted, infrastructures are the biggest challenge to the future development of the country’s mining industry, both in terms of transport, and storage at ports before being exported. (macauhub)