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DMEA Commentary DMEA
as the Prosperidade complex, while Gol nho was announced in 2012. reaching FID, though, was a di cult proposition. In 2012, Anadarko predicted FID could come in 2013, with rst production due in 2018.
Progress on Mozambique LNG was di cult as the companies backing the project lacked the resources to drive it forwards on their own. In order to secure nancing, sales and purchase agreements (sPAs) were needed to cover a large share of the proposed output. e last such sPA was reached with Japan’s JerA and Taiwan’s CPC in May for 1.6 million tpy, taking the total amount signed to 11.1 million tpy of long-term sales.
Impact
Wood Mackenzie has predicted revenues to the government from this project will be Us$3 bil- lion per year from the early 2030s.
A statement from standard Bank, which has provided a number of studies on the Mozam- bique gas projects, said this FID could improve the availability of foreign currency in the coun- try and reduce in ation risks. Following the FID declaration, the bank said it expected the Bank of Mozambique may resume reducing interest rates. standard Bank’s chief economist, Fáusio Mussá, warned that some of the impact of the project would only become apparent in the longer term.
“ e positive impact on economic activity in general will only be relevant once the country begins to export natural gas, between the end of 2023 and 2024,” he said.
In order to maximise the potential gains, the country must take steps to meet demand for goods and services. “ is preparation is occur- ring at various levels in the country, but there is still a long way to go, and standard Bank has created a Business Incubator that has been sup- porting small and Medium enterprises (sMes) to access some of these opportunities.”
A report from standard Bank on the project’s macroeconomic impact, modelling six trains of LNG, projected the Mozambique government may receive Us$212 billion over the lifespan of
the development.
exxonMobil and eni are eager for the
rovuma LNG project to get on track as well – and have said they are targeting FID this year. is project will produce 15.2 million tpy from two trains, with investment of Us$27-32 billion. standard Bank predicted revenues from this pro- ject to the government would be Us$4-5 billion per year for 25 years.
Importers
Mozambique is able to serve as a source for Asia and europe, positioning the country to supply either region as demand uctuates between the two as the seasons change.
Demonstrating this opportunity, Mozam- bique LNG signed a double-headed deal in Feb- ruary, with Tokyo Gas and Centrica.
Agreeing to supply 2.6 million tpy, the agree- ment provides for LNG ows to shi depending on demand – a position the Japanese govern- ment has taken pains to support in recent times in its move to reduce territorial restrictions in sales contracts. standard Bank has highlighted the importance of Asia, and China in particular.
The country should aim to become an “anchor supplier” to China, which is ramping up imports, which jumped 39% in 2018. Tying up supplies to China would allow Mozambique to develop “major, domestic industries which are economic bedrocks within such economies and employ thousands of indigenous citizens and boost national prosperity”.
e future seems rosy for Mozambique, but it has not been a smooth ride. e country has faced gruelling nancial renegotiations – with hidden debts having piled up on the expecta- tion of faster-than-realised gas revenues – and a mounting insurgency in the north. Violence in the area has had an impact on some of the con- struction plans, with a contractor killed earlier this year. Gas revenues should go towards solv- ing some of the country’s problems, but with political power seeing some areas receive more support than others, and tensions still evident from Mozambique’s turbulent past, this is by no means a certainty.™
Week 25 26•June•2019 w w w . N E W S B A S E . c o m P7