Mozambique’s energy potential attracts large international groups

23 April 2012

Mozambique’s energy potential, shown by the recent discoveries of larges natural gas and coal reserves, are leading large international groups to consider investing in the country, according to information from the Africa Monitor newsletter.

The newsletter said that the size of recent discoveries of natural gas in the sea off northern Mozambique was one of the focuses of international interest, particularly amongst groups that have gas as one of their current businesses, including Italy’s ENI, which is part of the consortium responsible for the most recent discovery.

One of the most recent signs of the country’s growing importance was the interest shown by multinational oil company Royal Dutch Shell in buying Irish company Cove Energy, which owns a stake in a consortium that is surveying for oil and gas in Mozambique, for a 28.5 percent premium on market prices.

There are also signs that two large US companies in the oil services (logistics) sector – Halliburton and Schlumberger – have acquired or are in the process of acquiring land in the area of Pemba, with a view to setting up services related to gas production.

According to Africa Monitor, industrial production of natural gas based on discoveries made so far (between 15 and 30 trillion cubic feet) will largely be for export to big consumer markets.

The extent of production will require construction of a liquefaction unit and an export terminal costing an estimated US$18 billion, Africa Monitor said.

Given that these new discoveries offer Mozambique the opportunity to become economically more significant, the United States have given the country greater importance bilaterally-speaking and the operator of the consortium that made the biggest discovery is US company Anadarko Petroleum.

As Mozambique becomes a large producer of natural gas and, potentially, of other hydrocarbons, along with coal and power production, the country will be a substantial source of revenues and will no longer depend on foreign aid to fund its State Budget.

The Economist Intelligence Unit (EIU), in a recent document, noted that gas discoveries in Mozambique were “world class” and noted that the country could become a significant new African energy producer.

According to the EIU, economic growth in Mozambique will remain strong, reaching an average of 8 percent per year, “in large measure supported by expansion of the mining sector.” (macauhub)