Page 12 - GLNG Week 45

GLNG COMMENTARY GLNG

Security concerns in the
wake of ASWJ’s attacks
and seizures of territory
have already affected
the gas sector.

of Mozambican gas extraction as favourable. abandoned its plans.
“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
ing between 35,000-40,000 boepd. The produc- is, 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 of
a lot of wells.” 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 likely
transition for different reasons. Clearly, gas is 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 for the
Domestic disappointments global energy industry, shows that enthusiasm Maputo will
Descalzi’s enthusiasm is understandable, given about Mozambique’s potential is not unreason-
his propensity for focusing on outcomes in the able. At the same time, though, ExxonMobil’s have to confront
long run. “Clearly, for such a big investment, we decision to delay its FID in the face of a pan- at least one of
need a long-term view,” he said at the Energy demic and the failure of multiple domestic gas
Intelligence Forum. Nevertheless, other foreign consumption initiatives show that concern these immediate
investors have a different perspective, especially about short-term challenges is also warranted.
with respect to proposals for the use of future gas In all likelihood, Maputo will have to confront challenges if it
production to supply the domestic market. at least one of these immediate challenges if it
Earlier this month, Zitamar and other Mozam- wants to move ahead with Mozambique LNG, wants to move
bican news agencies noted that Yara, a Norwe- the project that has made the most headway. The ahead with
gian fertiliser manufacturer, had decided not to challenge in question is the insurgency in Cabo
continue lobbying for the right to use the govern- Delgado Province. ASWJ’s attacks and seizures Mozambique LNG.
ment’s share of gas as feedstock for a new plant. of territory have already affected the gas sector
The firm has been in discussions with Maputo by depriving the group of access to Mocímboa
for the last five years in the hope of striking a da Praia. Mozambique LNG has indicated that
deal, they noted. Yara initially had high hopes it does not expect this loss to affect plans for
for the project, especially since Mozambique launching production in 2024, but that could
also has reserves of phosphate, which is needed change if the group gains control over larger
to produce NPK-type fertiliser. But the parties swathes of territory in Cabo Delgado. As such,
have never been able to agree on a price for the officials in Maputo would do well to think about
gas, and as a result the Norwegian company has how to respond to this security issue.™

P12 www. NEWSBASE .com Week 45 13•November•2020