Gas to start up by 2024 maintains perspective of strong economic growth in Mozambique
The Confederation of Economic Associations of Mozambique (CTA) considered on Tuesday that gas exploration projects in Mozambique to start until 2024 are still enough to promote strong economic growth, despite the Mamba investment in Area 4 being postponed.
“We have no doubt, Mozambique has an enormous amount of gas and, speaking of Area 1, only the two LNG (liquefied natural gas, English acronym) processing units are worth US $ 8 billion [7.3 billion euros] “, Simone Santi, president of CTA’s Mineral Resources, Hydrocarbons and Energy portfolio, tells Lusa.
Associated only with that investment is “a local content plan negotiated and agreed in the amount of US $ 2.4 billion to create value with Mozambican companies”, he adds – and one of the fundamental axes of development is “maintaining transparency and opportunities for companies residents in the country and Mozambican companies “, he stresses.
“It is important to continue to create trust, conditions and opportunities for the Mozambican private sector to provide services not only in construction, but also in the ‘offshore’ project, in the areas of maintenance, ‘catering’, navigation and logistics support”, he describes.
Santi is confident: he believes that “there will be no delays in the execution of the Total project, in Area 1 of the Rovuma basin and the delivery of the first LNG load for 2024 will not be compromised” – in line with what the French oil company itself has said.
An important signal, he says, is that the CCS JV consortium (which brings together Saipem, Mc Dermott and Chiyoda) responsible for engineering, procurement and construction “continues to work. The engineering of the project is respecting the ‘timing'”, he stresses.
In addition to Area 1, the Coral Sul floating platform in Area 4 (led by Exxon Mobil and ENI) will start producing in two years: “the first gas perspective remains in 2022”.
Despite being the smallest of the three gas projects in the Rovuma basin, it is enough to “bring a royalty benefit to the Government that will grow over the years to exceed $ 1,000 million a year”.
The employers’ confederation continues to believe in hiring 15,000 workers across the country thanks to the impulse of the LNG, in addition to benefits for students, universities and technical institutes.
“CTA and the private sector will continue to dialogue transparently as partners of operating companies so that the business environment is as viable as possible and is a positive factor in the evaluation of investments”, he adds.
On the Government side, CTA asks for “flexibility” linked to specific sector needs, such as the turnover of the workforce, the need to have highly specialized technicians and trainers, as well as solutions to logistics and inspection issues to avoid price speculation “.
Even without a date foreseen for the final investment decision, it is not possible to “completely exclude the Area 4 Mamba project”, but it is necessary to “take into account that the oil and gas industry depends a lot on the fluctuation of prices in the international market and the need to be competitive “.
All these equations were turned inside out with the drop in world demand caused by the covid-19 pandemic.
“At this stage, it is also important to consider the energy, hydrocarbon and mining sector as an essential sector for the Mozambican economy, as well as other sectors that will attract capital and foreign currency in order to stabilize the metical”, he underlines.
On the other hand, this will be the sector that will give impetus to others such as renewable energies, agriculture (fertilizers) and tourism, namely through business trips and conferences.
“Mozambique continues to be one of the sexiest countries in the hydrocarbon sector and the next round [of licensing for prospecting] will demonstrate high interest on the part of new operators”, he concludes.
The American oil company ExxonMobil officially announced earlier this month the postponement, without deadline, of the final investment decision for its mega gas project in the Mamba deposits in Area 4 in Northern Mozambique, where Portuguese company Galp is a partner.
The megaproject is expected to produce 15 million tonnes per year (mtpa) of LNG, a value higher than the 12.88 mtpa that Area 1, led by Total, expects to supply from 2024.