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AfrOil COMMENTARY AfrOil

(Photo: Mozambique LNG)

Pessimism or optimism for

Mozambique’s LNG plans?

Although Eni’s CEO has remained enthusiastic about multi-billion-dollar LNG
projects, the country’s economic and security challenges warrant attention

MOZAMBIQUE’S plans for turning offshore serving as the main entry point for shipments of
natural gas resources into an engine for eco- equipment and goods for the project. The port
WHAT: nomic growth and development have suffered facilities were seized in August by Ahlu Sun-
Mozambique’s gas sector at least two major setbacks this year. nah Wa-Jamo (ASWJ), an Islamist group that
has suffered multiple On the one hand, ExxonMobil decided in has links to the Islamic State (Daesh). Thus far,
setbacks this year. March to postpone a final investment deci- Mozambique’s armed forces have not been able
sion (FID) on the Rovuma LNG project. The to make much headway against ASWJ, which is
WHY: US-based giant had been slated to take this also known as Ansar al-Sunna. As a result, it has
The country’s gas fields step before the end of 2020, but Mozambique’s been unable to prevent the militia, which aims
have significant potential, National Petroleum Institute (INP) revealed to wrest control of the Cabo Delgado province
but pandemic-related in June that the deadline for the FID had been from the government, from committing atroc-
issues, the failure of do- pushed back to 2021. ities such as the beheading of more than 50
mestic gas consumption
programmes and civil The delay stems from the coronavirus people in the village of Aldeia da Paz earlier this
unrest could thwart this. (COVID-19) pandemic, which has had such week.
a negative impact on expectations of world These setbacks were all the more disap-
WHAT NEXT: energy demand that it has led many companies pointing for occurring as Total was success-
The Islamist insurgency – including but hardly limited to super-majors fully arranging a major financing agreement
in Cabo Delgado is such as ExxonMobil – to reconsider greenfield for Mozambique LNG. The French firm signed
likely to pose the greatest investment projects. a credit deal worth $14.9bn with a group of 20
short-term threat to gas On the other hand, the Mozambique LNG banks and export credit agencies in July, and it
development. consortium, led by France’s Total, lost access to intends to use the proceeds of the loan to cover
the port Mocímboa da Praia, which has been most of the costs of its $20bn project.

P4 www. NEWSBASE .com Week 45 11•November•2020