Mozambique should soon be a “substantial” exporter of natural gas

8 August 2011

London, United Kingdom, 8 Aug – Mozambique should soon become a “substantial” exporter of natural gas with the planned construction of an LNG terminal in the northern province of Cabo Delgado, the Economist Intelligence Unit indicates.

Gas discoveries over the last year in the region by the US company Anadarko Petroleum should serve to confirm the viability of developing a liquid natural gas (LNG) terminal, the EIU asserts in its most recent report on Mozambique.

Unconfirmed estimates cited by the Economist indicate minimum reserves of 10 trillion cubic feet (more than 283 billion cubic metres) of natural gas, “many times more than Mozambique’s only currently producing gas field” in Pande/Temane in the southern province of Inhambane.

“Production (from Pande/Temane) is exported to South Africa via a gas pipeline. (But) the natural gas deposits in Cabo Delgado are too far from that pipeline and industrial end users in the region,” the report states.

“This situation suggests that an LNG unit to access the international export market is the only realistic option to develop” the newly discovered fields, it adds.

With this project, Mozambique “may become a substantial exporter” of natural gas, the report indicates.

The EIU expects Mozambican exports to be boosted in the next two years, sustained by aluminium, coal, gas and agricultural products, thus enabling contraction of the commercial deficit in 2012.

In May, Brazil’s Vale began extracting coal from its mine in Moatize, Tete province. Exports were to begin in July and reach 1 million tonnes this year.

Plans call for 6 million tonnes to be exported next year, then almost doubling to 11 million tonnes by 2014.

The Moma heavy sands deposit of the Irish Kenmare Resources is already operating. At the end of this year production should begin at another coal operation in Benga, pertaining to Australia’s Riverdale Mining.

Largely due to growing investment in mineral resources exploitation and infrastructure projects, the EIU envisages average annual growth of 7.4 percent for the Mozambican economy in 2011 and 2012, with inflation down to 5 percent next year.

To accommodate the expansion of coal exports, the Maputo port recently announced an enlargement programme. The operator of the Matola coal terminal, South Africa’s Grindrod, is completing a study on the feasibility of more than doubling capacity by 2014 to 20 million tonnes annually.

The EIU asserts that the “strong growth” is shared by the rest of the port, which includes a container terminal and others for sugar and citrus fruit.

This year exports through that port should reach 12.6 million tonnes, more than double the 5 million tonnes recorded in 2003.

The operations have benefitted from better rail performance at the port, with the turnaround time for trains from South Africa to Maputo dropping from an average of 200 hours to just 90 hours.

The Maputo Port Development Company estimates that an investment of US$750 million over the next 20 years could quadruple the port’s capacity to 50 million tonnes. (macauhub)