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Discovering Gas in Mozambique

There is hope that Mozambique's recently discovered gas fields could help drive development in the country.
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ENI's Scarabeo 7 rig, docked in southern Africa.

Chimoio, Mozambique:

Italian energy giant ENI has recently discovered what could be one of the biggest natural gas deposits found in the past decade off the eastern coast of Mozambique. The gas field, estimated to contain around 15 trillion cubic feet of gas was discovered around a month ago and could potentially catapult one of the world's poorest countries into the ranks of the world’s rich hydrocarbon producers.

It is hoped that this outstanding volume of natural gas will facilitate considerable development in Mozambique’s gas industry, and lead to large-scale exports regionally and internationally as well as help supply the domestic market. Rising fuel prices have played a key role in Mozambique’s inflation rate over the past few years, but the new gas reserves could stem this trend. Revenues from the natural resource could also drive industrial and economic growth in Mozambique more generally.

Best-laid plans

ENI executives recently met Mozambique’s president Armando Guebuza with plans already underway to build a town near the gas location and companies are already flocking to the country to capitalise on the area's potentially massive economic boom.

Indeed, ENI Chief Executive Paolo Scaroni has described the discovery as “one of the most generous fields we have ever seen in our history in terms of gas”. It has emerged that ENI is set to invest US$50 billion in developing the gas field. It is believed that the developments will generate more than 40,000 jobs at a new facility in the country's north and there are further plans underway to build two or three liquefiers in Mozambique predicted to begin liquefying in 2016.

While it is too early to firmly establish the potential revenue levels from the Mozambique gas fields, experts have estimated that the country would rake in billions of dollars from gas per year.

Rebuilding from revenues

With little significant heavy industry, Mozambique hopes to cash in on its gas resources and ordinary Mozambicans are optimistic that the new gas discovery will assist the country’s recovery after years of civil war. Though Mozambique has successfully made the transition to peace, stability and strong economic growth, it is still struggling from the devastating effects of the civil war which ended in the 1990s.

Rodrigo Manuela, a small businessman from Chimoio who spoke to Think Africa Press last week, shared his dreams that revenue from the gas would pull the country out of the shackles of poverty.

“After years of civil war no-one ever thought that anything good could come out of our country but with the discovery of gas all eyes are on us.” He explained, “I am quite confident that the revenue from the gas will benefit all the people in the country – this is our only hope of fast recovering from the years of civil war”.

Manuela qualified his hopes for Mozambique, however, by adding: “It is a miracle from God but the revenue must be handled transparently for the benefit of all. Even our neighbouring countries like Malawi, Zambia, South Africa and Zimbabwe are in one way or another going to benefit. So it is good news for the whole region not Mozambique alone.”

Shifting and growing in the region

Indeed, the discovery by ENI is of significance not simply to Mozambique’s economy and Mozambicans but those in the region more broadly. President Guebuza is reportedly planning to send his advisors to Nigeria and Angola – two of the leading natural gas producers in Africa – to learn from their oil and gas operations. And the natural gas found off the shore of the northern province of Cabo Delgado may also shift balance of energy production in the region. Tanzania, where BP is already operating, has a considerable head-start, but Mozambique is looking to catch up quickly and eventually surpass Tanzania’s gas production.

While Africa's eastern coast has long been considered a peripheral player among world natural gas producers, this may be about to change. The discovery of massive gas deposits by the Italian oil and gas giant was actually closely preceded by a very significant discovery of gas by the Houston-based oil and gas company Anadarko Petroleum Corp along the same coastal area. Furthermore, while it was originally believed that Anadarko’s discovery was surpassed by ENI’s, Anadarko has recently more than doubled its estimate of how much gas the field contains.

And, with drilling progressing in Tanzania, Madagascar and Kenya, explorers expect more big gas discoveries which could make the area a major exporter of gas. Driven by Mozambique’s recent finds, we may see the focus of natural gas exports shift slowly but steadily towards east Africa.

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Comments

Well this Odissey of gas discoveries in Mozambique by the way my birth country is a happy event for my fellows mozambican living there. Such news bring hope to the hopeless, but I am afraid that this hope is ephemeral. You may ask me why I say this....and my answer is I say this because I know my country, I know the government of my country, I know the ministers of my country and above all I know my president.Let me begin talking about my president: he is the most rich manh in the country, in every foreign private company that intended to stablish itself in my country and succeded he won stakes there so he is somekind of owner of almost every company operating in my country. My president is a smart guy He doesnt stand in front of the management for that exists his daughter she is the CEO of many companies there in my country She is a very successfull businesswoman thanks to her father who is also my president....And the restant leadership of my country follow the example of my president they want to become rich through any ways, particularly natural resources....for that I say: Open your eyes my people, they say Cahora Bassa (biggest mozambique dam which provides power to South Africa other regional countries) is Ours, but in true is Theirs (thats why from thet total of 20 thousand people existent, only 15% benefits from it). Now they will come to say Gas is ours....but they will putting the money in their pockets...ask me why....I will answer because gas is theirs....(i didnt say it)

Great news... geologically! And I'm not surprised.  (Years ago while living in southern Africa, I felt sedimentary areas of Moz. could hold much hydrocarbons, but that wasn't my specialty. My own work was on metals toward the west coast of southern Africa had hit ore immediately.)
HOWEVER. I doubt much wealth will "trickle down." Firstly, global corporations exist to funnel money overwhelmingly UP to corporate owners*, notably CEOs who can get extremely rich.
Secondly, the hurdle of paying royalites only feeds another gang - black rulers and their cronies in Moz. (Africa is totally corrupted, like Mexico; USA looks honest but has immense networks of money power to squeeze others - shown by fact AVERAGE white living standards declined since 1970.)
[*Just last week, a major US capitalist and talk show host on LANG & O'LEARY, said he was un-impressed by the fact Exxon said it will invest $50 billion to find new raw materials over the next decade. He said he only cares if the return will be several times the investement, and fast, with low risk of political turmoil. That is the "game" in a nutshell, from an expert, talking straight for once.] As for the honesty of the rulers in Mozambique now (whom I don't know much about), I'm glad another Mozambiquan man wrote on that. (My N American white-man view would be criticized as uninformed and racist etc.)
What would be best is... surprising... A restoration of Portuguese settlement, colonization, and orderly development by a more advanced group (of Europeans) actually living permanently  in the land of Mozabique (unlike investors from overseas who only want fast profits sent out.) To start with, colonists themselves would benefit. (And they deserve it, to compensate for being removed violently by anti-white racist gangsters... who then fought and looted a lot!) But they would not be inclined to just ship out fuel and pay foreign corporate developers. They would go about it more slowly and do it themselves, because they seek good jobs and can learn this (more readily than average folks in Mozambique unfamiliar with technologies.). And they would develop many aspects of the country. And because they have money and are staying, the'd hire locals to do much, and so wealth would trickle down to working folks already living in Mozambique - the "natives." I would not be a sudden windfall, but development step by step. European colonization did achieve much of this before, BUT... it was saddled with large scale corporate games that were owned in Europe (or even USA!) and sought the usual corporate goal of siphoning off profits as fast as possible and shipping resources out without using them locally or regard to what will happen when they are exhausted. A wise colonial sttlement will develop resources and use resources locally to a large extent, and prepare for exhaustion of ores or hydrocarbons, since these operations always must finally end. So the colonists must have a long-term settlement agenda and vision, for their own nation. (A nation is a body of folks with common nativity - or lineage.) With benefits to others in the region, in a "country" (a place of diverse nations but some common government at the top - preferably run by the most enlightened group... not one-man-on vote democracies, where the largest dumb group gets to elect leaders!)
 

PS: Notice ENI says they may (?) invest $50 billion. Even if they do (doubtful), they only intend to create 40,000 jobs for Mozambicans.... costly $1,250,000 per job. That is very weak bang for a buck invested to create jobs! On the other hand, if you encouraged young Europeans to colonize in Mozambique (with a core of Portuguese who originally did the job, and gave you your country language and much more) I say the $50 billion would be enough to return 500,000 settlers OR MORE. ($100,000 per settler.) And they would do many things, not just develop natural gas. And they would hire many people... millions of jobs would develop!