What role will gas have in Mozambique’s future development?

Onshore LNG is in doubt again, but gas is set to remain an important fuel for power generation

Good afternoon. What role will gas have in Mozambique’s future development? That has been a big question for many years in Mozambique, and the likely answer has fluctuated depending on a number of factors: instability, the global energy transition and global energy prices, among others.

The outlook for the LNG projects in the Rovuma Basin is both good and bad, respected energy consultancy Wood Mackenzie points out in a new report looking ahead to 2023, and which is featured in the Mozambican press today. The Coral South floating LNG project has so far been a success, and allowed Mozambique to join the club of LNG exporting countries. It has also, WoodMac says, made the onshore LNG plans for Area 1 and 4 “look unreasonably risky by comparison.”

The consultancy therefore predicts that the Area 4 consortium, led by Eni and ExxonMobil, will abandon its plans to develop an onshore LNG project in Cabo Delgado, preferring instead to develop more floating LNG capacity. That might in turn provide another argument for TotalEnergies not to proceed with its onshore LNG project. It has sunk a certain amount of investment into it already, but getting it back up and running might at some point seem less attractive than simply walking away — or copying its Area 4 counterparts in going for FLNG instead.

But Mozambique’s relationship with gas is not all about exports. The fuel plays an increasingly large role in electricity generation in the country, something which is only set to grow with the power plant that Sasol and Globeleq are building at Temane, in Inhambane province. And a new project to implement a 2000 megawatt gas-fired power plant at Beluluane, Maputo, could provide much needed energy at the Mozal aluminium smelter, whose electricity supply contract is due to expire by 2026.

Those projects, like so many in Mozambique, rely on development finance — and so did Sasol’s divestment of its stake in the Ressano Garcia gas-fired power plant last year, to Azura Power. In an in-depth article published by Zitamar yesterday, which is free to read, we dig into that deal — and ask why the World Bank provided almost $200m worth of guarantees to grease the wheels of what was simply a private transaction, and one which takes majority ownership of the project away from the Mozambican state, and into the hands of foreign private equity.

SEE: World Bank digs deep to fund private deals in Mozambique gas-to-power

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Agenda:

• 15-18 January: President Filipe Nyusi on a four-day visit to the United Arab Emirates, invited by the president of the UAE, Sheikh Mohammed Bin Zayed Al Nahyan of Abu Dhabi

• Today, 19:00 CAT: Webinar: Press freedom under strain in Mozambique, featuring Zitamar editor Tom Bowker among the panellists

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Today’s headlines:

• Mozambique’s onshore LNG plans could end this year, says major energy consultancy (Notícias, Lusa)

• Logging companies in Montepuez are ‘renting out licences’ (Notícias)

• Covid-19 vaccination centres reopen in Tete

Today’s front pages in Maputo. Photo © Faizal Chauque / Zitamar News