Mozambique’s gas resources have the potential to meet both regional and international gas demand, however, delays in the development of gas projects due to political instability in the southern African country continue to restrain market expansion.
The growth of Mozambique’s gas market in 2022 and onwards will be a game changer for Africa’s hydrocarbon market and will help set the continent on a trajectory towards becoming a global energy hub, according to the African Energy Chamber’s (AEC) Q1 2022 Outlook, The State of African Energy. At a time when gas production across Africa needs to ramp up to meet growing energy demand, factors such as inadequate funding in new E&P activities and diminishing production in legacy projects is challenging the ability of African hydrocarbon producing countries to expand gas output. However, large-scale projects and investments made in Mozambique – with its 100 trillion cubic feet of reserves – can help expand Africa’s gas market.
Supply vs demand levels between 2022-2025 suggest that there is sufficient Liquefied Natural Gas (LNG) supply to satisfy growing demand as new projects come online in 2022 such as the Coral Floating Liquefied Natural Gas project (FLNG) in Mozambique, states the AEC’s Outlook. The Coral FLNG, comprising approximately 450 billion cubic metres of gas in the Coral South Field in Area 4 in the Rovuma Basin off the coast of Mozambique, will enable the southern African country to produce 3.4 million tons per annum (mtpa) of gas for export to Europe and Asia in 2022. Additionally, TotalEnergies’ 12.8 mtpa Mozambique LNG project and Eni and ExxonMobil’s 15.2 mtpa Rovuma LNG project have the potential to transform the regional gas market, positioning Mozambique as a highly competitive gas exporter. Despite both projects having been delayed, progress is being made to get these developments back on track.
According to the Energy for Growth Hub, Mozambique’s gas could bring in $50 billion in foreign investments and enable the government to reap $95 billion in revenues over the next 25 years with the right policies and investments in place as well as a capital attractive political environments. Mozambique can also utilize its energy reserves to curb energy poverty as the percentage of its population living with no access to reliable energy continues to increase from 19.6 million in 2007 to over 21 million in 2017, according to the United Nations Development Programme.
“Mozambique’s gas reserves have the potential to address energy poverty across the entire southern African region by helping neighbouring countries such as Zimbabwe, Botswana, Malawi and South Africa meet gas demands. However, political instability in the country and a lack of investment in enabling infrastructure will need to be addressed for Mozambique to become one of the top-10 global LNG exporters,” stated NJ Ayuk, Executive Chairman of the AEC.
Despite having vast gas reserves, Mozambique’s progress in development and monetization remains slow. This highlights a growing need for the government to put in place a conducive political environment that allows investors and international majors to participate in the market. In this regard, the AEC’s annual investment summit, African Energy Week (AEW), which will take place in Cape Town from 18 – 21 October 2022, will discuss measures the government of Mozambique can implement to fast-track the development of its gas industry. AEW 2022 will host panel discussions and high-level meetings about the role of Mozambique’s gas industry in addressing energy poverty across the African continent and how the country can set up a capital-attractive regime to boost its market.
AEW 2022 is the AEC’s annual conference, exhibition and networking event. AEW 2022 unites African energy stakeholders with investors and international partners to drive industry growth and development and promote Africa as the destination for energy investments. Key organizations such as the African Petroleum Producers Organization, as well as African heavyweights including Equatorial Guinea and Nigeria, have partnered with AEW, strengthening the role the event will play in Africa’s energy future.
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