(2015-12-04) The Economist Intelligence Unit (EIU) believes that significant gas production in Mozambique before the middle of the next decade is “highly unlikely” because of market conditions and difficulties in the country.
Analysing the market for natural gas in Mozambique and Tanzania, experts at the British magazine The Economist claim that “with the market fully stocked until the mid-2020s, it seems unlikely that gas from East Africa will enter the market in significant quantities before then”.
The government and oil companies operating in the region hope to start exporting gas in large quantities in 2020 or 2021, but the EIU says, “natural gas will not transform the short-term prospects of these countries,” because “oversupply and increasing competition in the global gas market as well as internal regulatory difficulties and inadequate infrastructure raise significant doubt about the future of gas in the region”.
Admitting that “East Africa has the potential to be a global player, with reserves of 100 billion cubic feet off the Mozambique coast and 55 billion off Tanzania’s coast,” experts say they hope that “gas projects in the region continue to move forward, but production of significant amounts before the end of the decade is now highly unlikely”.
The report compares the two countries and identifies four common weaknesses – commercial, financial, technical and regulatory constraints. EIU experts say that Italy’s ENI which will be the first company with a project up and running. “Even if it is able to reach a final investment decision by 2016, as planned, production before the 2020s remains unlikely, given the continuing difficulties in the Mozambique regulatory sector in,” the report concludes.
The onshore projects, they add, “continue to be subject to even greater uncertainty,” because even if the technical and regulatory difficulties are overcome, albeit with some delay, “it is unlikely that gas from East Africa will be exported in significant quantities before mid-2020, because the market is already fully stocked there”.
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