LNG in Mozambique : the Rise of a New Titan

LNG in Mozambique : the Rise of a New Titan

The potential of the country’s offshore fossile reserves can put the country’s economy in a hyperactive drive, boosting it for decades to come.

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Mozambique’s Offshore Liquefied Natural Gas (LNG) project shows immense potential to boost the country’s economy. The potential of the country’s offshore fossile reserves can put the country’s economy in a hyperactive drive, boosting it for decades to come. The project, which has been delayed for a few years, is not set to start production by the year 2020, with capacity of 100 million cubic feet of natural gas per day (Offshore Technology, 2017). Undoubtedly, Mozambique’s LNG project will be the most important source of energy in the Sub Saharan Africa in the next five years.

A Painful birth

Source: ExxonMobil Investor Presentation

Source: ExxonMobil Investor Presentation

The project has been victim of what is known as the resource curse, which has attracted too much attention from oil and gas companies for over two decades. With a series of corporate frauds and political unrest, the project has failed to see the expected fruits of its harvest. The offshore LNG project has attracted millions of dollars in investment with part finished infrastructure, including a deep-sea port, railway network and purchase of naval interceptors. Due to extreme piracy activity in the region, securing offshore investment has become imperative for the project’s viability (Offshore Technology, 2017).

The project is now ready for take-off

With some of the biggest oil and gas companies involved such as Exxon Mobil and Royal Dutch Shell, the project will launch its production by the year 2020. Wits its estimated production levels at 5.26 Bcf/d ( source oilandgas360.com) , Mozambique will become the third largest producer of natural gas in the Sub-Saharan region and will pose the country as a strong contender to Qatar. Here is how the country will compete with Qatar, which is also a huge producer of Liquefied Natural Gas (LNG).

 

Qatar VS Mozambique

At present, Qatar’s natural gas production is roughly 4,000 billion cubic feet per year and contributes almost 30 percent towards its export revenues (World Top Exports – Daniel Workman). It is one of the largest natural gas suppliers in the world, facing strong competition from industry rivals including Iran and Russia. However, with an estimated annual production of 5.26 billion cubic feet of natural gas, Mozambique will become one of its strongest contenders in the region (Mozambique LNG).

Qatar : leading producer in the area

Qatar : LNG leading producer in the area

Qatar exports its natural gas to neighboring countries and to some of the African countries (World Top Exports – Daniel Workman). Qatar is the richest country in the world; the country’s highest export revenue generation is related to the trading of oil and gas in international markets. Once Mozambique’s offshore LNG project initiates its production, it will be able to compete with Qatar in the international market and would become one of the largest natural gas producers in the world. Mozambique would be able to export gas to African countries for a lower price and compete with the majors producers.

 

In conclusion, year 2020 will mark Mozambique as the most important source of energy in the African region. The offshore project will give a massive boost to Mozambique’s economy, giving it a trade surplus. In addition, Mozambique will be able to compete in global natural gas market, giving strong competition to Qatar in the years to come.

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