Page 5 - DMEA Week 45

DMEA COMMENTARY DMEA

“What we have to say about Mozambique is Meanwhile, Yara is not the only company to
that the upstream is quite interesting,” he com- suffer disappointment on this front. Accord-
mented. “It’s not very expensive. [There’s] a very ing to Zitamar, neither of the firms that won a
low break-even [point], as each well in terms of contest for the best domestic gas consumption
boepd [barrels of oil equivalent per day] is rang- project in 2016 have made any progress. That is,
ing between 35,000-40,000 boepd. The produc- Royal Dutch Shell (UK/Netherlands) has not
tion rate is very good, so you don’t need to drill moved ahead with the planned construction
a lot of wells.” of a gas-to-liquids (GTL) plant in Palma, while
The Eni chief further asserted that LNG pro- Great Lakes Africa Energy (UK) has not built a
duced from Mozambican gas would help sup- gas-fired thermal power plant (TPP) in Nacala.
port efforts to reduce global emissions. “I think
that we need Mozambique gas,” he said. “Gas is Short-term priorities
still a very important contributor to the energy Reconciling these two perspectives is not
transition for different reasons. Clearly, gas is likely to be easy.
essential if you are looking at emissions.” Descalzi’s focus on the long term, even in
the face of all the problems 2020 has caused
Domestic disappointments for the global energy industry, shows that
Descalzi’s enthusiasm is understandable, given enthusiasm about Mozambique’s potential is
his propensity for focusing on outcomes in the not unreasonable. At the same time, though,
long run. “Clearly, for such a big investment, we ExxonMobil’s decision to delay its FID in the
need a long-term view,” he said at the Energy face of a pandemic and the failure of multiple
Intelligence Forum. Nevertheless, other foreign domestic gas consumption initiatives show
investors have a different perspective, especially that concern about short-term challenges is
with respect to proposals for the use of future gas also warranted.
production to supply the domestic market. In all likelihood, Maputo will have to con-
Earlier this month, Zitamar and other front at least one of these immediate challenges if
Mozambican news agencies noted that Yara, a it wants to move ahead with Mozambique LNG,
Norwegian fertiliser manufacturer, had decided the project that has made the most headway. The
not to continue lobbying for the right to use challenge in question is the insurgency in Cabo
the government’s share of gas as feedstock for Delgado Province. ASWJ’s attacks and seizures
a new plant. The firm has been in discussions of territory have already affected the gas sector
with Maputo for the last five years in the hope of by depriving the group of access to Mocímboa
striking a deal, they noted. Yara initially had high da Praia. Mozambique LNG has indicated that
hopes for the project, especially since Mozam- it does not expect this loss to affect plans for
bique also has reserves of phosphate, which is launching production in 2024, but that could
needed to produce NPK-type fertiliser. But the change if the group gains control over larger
parties have never been able to agree on a price swathes of territory in Cabo Delgado. As such,
for the gas, and as a result the Norwegian com- officials in Maputo would do well to think about
pany has abandoned its plans. how to respond to this security issue. ™

Week 45 12•November•2020 www. NEWSBASE .com P5