Maputo – The Mozambican government and the partners in the consortium exploiting the natural gas resources in Area One of the Rovuma Basin, off the coast of the northern province of Cabo Delgado, last week signed the Final Investment Decision for a liquefied natural gas (LNG) project, which will be the largest foreign investment in the history of Mozambique.
The total investment is around US$25 billion -- US$14 billion will come from bank loans, and US$11 billion from the capital of the partners in the Area One Concession.
The agreement on the Final Investment Decision was signed by the Mozambican Minister of Mineral Resources and Energy, Max Tonela, and Al Walker, chairperson of the US company Anadarko, which heads the consortium.
President Filipe Nyusi, who witnessed the signing, declared the ceremony was “the guarantee of exploiting a resource that is fundamental for the development of Mozambique. Today the present meets the future”.
“This investment decision closes long and difficult negotiations,” said Nyusi. “We own world class gas reserves. These reserves present unique opportunities for growth, expansion of the economy, and rapid increase in our gross domestic product.”
He called for “calm and good sense” and recognition that “the results will not come today or tomorrow. They will come with time”. Expectations needed to be managed, since “we must take into account that the return on the investment will take time”.
“We must know how to take advantage of our natural resources to invest in key sectors such as agriculture, agro-processing, tourism and infrastructures, as well as social sectors such as education and health,” said Nyusi. He hoped to see rural households advance from subsistence agriculture to commercial farming
The Mozambican government, he added, was well aware that development cannot be managed in an environment of political uncertainty or insecurity, and pledged continued efforts to secure effective peace, through the government’s dialogue with the former rebel movement Renamo.
“We want to assure all those present today that the Mozambican people want to live in peace, and do not want to live under the spectre of war,” he said.
He denounced the terrorist attacks by armed gangs in Cabo Delgado, apparently inspired by Islamic fundamentalism, who were massacring innocent people and looting their property.
Al Walker told the ceremony: “We are not talking about an opportunity that comes once in a generation. This goes beyond that and is something for several generations, and we are very pleased to announce it today.
“All the conditions are in place, and now we shall advance to the construction phase.”
He predicted that the Area One LNG will double Mozambique’s Gross Domestic Product, and create thousands of jobs.
The Under-Secretary of Economic Affairs in the US Department of Commerce, Karen Kelley, said the “historic partnership” between the Mozambican government and Anadarko will open opportunities for further US investment.
“Our presence here shows that we believe in the growth of Mozambique in the long term,” she declared.
The Area One LNG project involves the construction of two liquefaction plants (known as “trains”) on the Afungi Peninsula in the Cabo Delgado district of Palma, producing 12.88 million tonnes of LNG a year.
The project requires the resettlement of villagers from Afungi to a new town. The Minister of Land, Environment and Rural Development, Celso Coreia, told reporters that the resettlement town will be inaugurated within the next month.
Anadarko holds 26.5 per cent of Area One and is the operator. Its partners in the consortium are the Japanese company Mitsui (20 per cent), PTTEP of Thailand (8.5 per cent), the three Indian companies ONGC Videsh, Bias Rovuma Energy, and BRPL Ventures (each with ten per cent), and Mozambique’s own National Hydrocarbon Company (ENH – 15 per cent).
Anadarko will not be operator for much longer, since the company is being sold to Occidental Petroleum, and the French energy giant Total has agreed to buy all of Anadarko’s African assets, including Rovuma Basin Area One from Occidental.