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DMEA COMMENTARY DMEA

Mozambique’s LNG plans: Is the

outlook optimistic or pessimistic?

Although Eni’s CEO has remained enthusiastic about multi-billion-dollar LNG

projects, the country’s economic and security challenges warrant attention

MOZAMBIQUE MOZAMBIQUE’S plans for turning offshore been unable to prevent the militia, which aims
natural gas resources into an engine for eco- to wrest control of the Cabo Delgado province
WHAT: nomic growth and development have suffered at from the government, from committing atroci-
Mozambique’s gas sector least two major setbacks this year. ties such as the beheading of more than 50 people
has suffered multiple On the one hand, ExxonMobil decided in in the village of Aldeia da Paz earlier this week.
setbacks this year. March to postpone a final investment deci- These setbacks were all the more disap-
sion (FID) on the Rovuma LNG project. The pointing for occurring as Total was success-
WHY: US-based giant had been slated to take this fully arranging a major financing agreement
The country’s offshore step before the end of 2020, but Mozambique’s for Mozambique LNG. The French firm signed
gas fields continue National Petroleum Institute (INP) revealed a credit deal worth $14.9bn with a group of 20
to have significant in June that the deadline for the FID had been banks and export credit agencies in July, and it
potential, but pandemic- pushed back to 2021. The delay stems from the intends to use the proceeds of the loan to cover
related issues, the coronavirus (COVID-19) pandemic, which most of the costs of its $20bn project.
failure of domestic has had such a negative impact on expectations
gas consumption of world energy demand that it has led many Eni’s optimism
programmes and civil companies – including but hardly limited to At the same time, other international oil com-
unrest could thwart this. super-majors such as ExxonMobil – to recon- panies (IOCs) have remained very optimistic
sider greenfield investment projects. about Mozambique. For instance, Claudio Des-
WHAT NEXT: On the other hand, the Mozambique LNG calzi, the CEO of Italy’s Eni, indicated during the
The Islamist insurgency consortium, led by France’s Total, lost access to Energy Intelligence Forum in mid-October that
in Cabo Delgado is likely the port Mocímboa da Praia, which has been he still saw the Coral South LNG and Rovuma
to pose the greatest serving as the main entry point for shipments of LNG projects as good opportunities. (Eni is lead-
short-term threat to gas equipment and goods for the project. The port ing the Coral South LNG scheme and is working
development. facilities were seized in August by Ahlu Sun- with ExxonMobil on Rovuma LNG.)
nah Wa-Jamo (ASWJ), an Islamist group that During a virtual discussion at the conference,
has links to the Islamic State (Daesh). Thus far, Descalzi noted that Mozambique’s offshore fields
Mozambique’s armed forces have not been able held enough gas to support long-term devel-
to make much headway against ASWJ, which is opment. He also described the economics of
also known as Ansar al-Sunna. As a result, it has Mozambican gas extraction as favourable.

P4 www. NEWSBASE .com Week 45 12•November•2020