MozambiquetohelpfillsupplygapleftbyRussia

MEDIA RELEASE

18 OCTOBER 2022

Stars align for Mozambican gas, but security challenges remain

With soaring gas prices and European countries looking for alternative supplier to Russia after its ongoing occupation of Ukraine, the transformational potential of Mozambique’s gas has been reignited.

Jonathan Ross, Head: Oil and Gas Sector Solutions at RMB in London, said: “The world, and Europe in particular, desperately needs countries like Mozambique to fill the supply gap left by Russian oil and gas.

“Only last year, questions were being raised as to whether Mozambique had left it too late: long term gas demand was in the spotlight given the energy transition and global gas prices were heading too low to justify investing in many of the potential $120bln of Mozambique gas projects. 

“But now the energy landscape has been irreparably altered: Europe has committed to replacing 155bcm/pa of gas it imports from Russia – that‘s is around seven times the capacity of Mozambique’s current sanctioned LNG projects. And with LNG prices in some markets up around  eight to nine times in the past year, the potential economics of these projects and fiscal benefits for Mozambique are huge.

“The stars have re-aligned for Mozambican gas projects which could not only uplift the Mozambican economy and help deliver secure energy for industrial development, but also help alleviate worldwide supply shortages.”

Ross noted that Mozambique was sitting on ‘colossal’ gas reserves and could produce 16million tonnes per annum of LNG in 2026 if gas projects resume. In future, Mozambique could grow to produce up to 89million tonnes per annum on already discovered reserves of gas.

“Mozambique still has the potential to be a major player in the global gas industry and resume its natural gas liquefaction projects,” said Ross.

Mozambique gas has broad applications and can used across the residential, commercial and industrial sectors for purposes such as power, heating, cooking, generating electricity and manufacturing a wide variety of products.

Ducla Dos Santos, Relationship Manager Corporate, FNB Mozambique, said that many of the major gas projects were put on hold eighteen months ago due in-country security concerns.

“We are hopeful that reports affirming that TotalEnergies SE will review its withdrawal decision from all Mozambique LNG projects will confirm, by March, to resume work on its $20 billion liquefied natural gas export project - the largest private investment in Africa.

"Other companies like ExxonMobil Corp, an onshore which is adjacent to the TotalEnergies SE project, is also considering a return to operations.”

Dos Santos stated that the imminent resumption of gas projects in Mozambique was likely. "Hopefully the country will be able to unlock its potential transformative LNG sector, as the government assures oil and gas majors that the security situation is under control.”

End

Contact:

Jigna Popatlal l FNB Mozambique l Jigna.Popatlal@fnb.co.mz