(2015-11-30) The president of the National Hydrocarbon Company (ENH) of Mozambique admits to “feeling the pressure” from the population to accelerate the exploitation of natural gas reserves and enhance the economic development of the country.
In an interview with the Financial Times, Omar Mitha, who became president of the Mozambican government agency in August, says that he hopes to export the first cargo of liquefied natural gas (LNG) in 2020 and is optimistic about the benefits to Mozambique, even in the context of lower raw material prices.
“Even with our problems, we offer competitive advantages compared with other countries,” said the official, considering that the allocation of exploration permits in October to the US’s ExxonMobil and Italy’s Eni “is a clear indication” of investors interest.
In the Financial Times report, Mitha is presented as an optimist who understands the difficulties of the market and the country’s constraints, which is why he describes the potential that LNG offers the country as “a transformation project and a unique opportunity for Mozambique to skip some development stages.”
Among the various difficulties faced by companies in Mozambique are the lack of specialized labour, technical problems, high operating costs and now the fall in the price of raw materials, which requires more rigorous studies on the difference between the cost of investment and the operating profit.
“What is critical is accelerating the pace towards the market because the window of opportunity may decrease,” said the official, explaining that “the reason behind this is that the market’s dynamics are changing”.
This dynamic is linked to the reduction in the price of raw materials, which analysts estimate will last several years before possibly returning to the levels of last year, and the new geography of buyers, mainly Asian, with Japan and India close behind.
Mozambique hit the front pages of international newspapers in 2010 when Anadarko and Eni discovered LNG in the Rovuma Basin with the potential to put the country among the world’s largest producers.
In a statements quoted by Jeune Afrique magazine, Omar Mitha says that when the natural gas is in production, the gross domestic product of Mozambique could rise from the current US$16 billion (EUR 14 billion) to US$39 billion (EUR 35 billion) in 2035, pulling along the building of infrastructure and creating an estimated 700 000 new jobs.
ENH also expects the state to collect more than US$67 billion (EUR 60 billion) in revenues from the exploitation of natural gas in Rovuma, assuming that the value increases during the project’s development.
Energy multinationals will invest US$31 billion (EUR 27.7 billion) in gas projects in the Rovuma basin in northern Mozambique, the president of ENh said.
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