A US6 billion, 2,600 km pipeline to take gas from the Cabo Delgado to South Africa has been agreed, but concerns have been raised about the secrecy relating to the Mozambican partner, and lack of other details. Most of the gas would be sold to South Africa to pay for the pipeline, but it would run along the coast and supply at least coastal cities such as Nacala and Beira, which would allow the development of gas using industries.
The agreement is between Mozambique’s National Hydrocarbon Company (ENH), SacOil, Profin Consulting, and the China Petroleum Pipeline Bureau (CPP). The CPP will finance and carry out the pre investment studies and secure 70% of the project’s budget from Chinese financial institutions. CPP is owned by China National Petroleum Corporation (CNPC), China’s largest oil and gas producer and supplier, which holds 20% of the ENI-led Area 4 project offshore northern Mozambique, which last month received government approval to move ahead with its floating gas liquefaction project. CPP’s website says that since 2000, it has constructed more than 40 long-distance pipelines, totally more than 50,000 km.
CPP and ENH are the only partners with experience in this area. Profin Consulting was established in Maputo in July 2015 as a “Sociedade Anonima” and its shareholders have not been published; it has no known activities.
SacOil is a South African oil and gas company with exploration rights in Egypt, Malawi and DRC but little actual production and it has not been involved in a pipeline. Its chair is Tito Mboweni, former governor of the South African Reserve Bank and chair of gold miner AngloGold Ashanti 2010-14. Independent nonexecutive directors include Mzuvukile Jeff Maqetuka, a former South Africa State Security Agency director-general, and Vusumzi Patrick Pikoli, former National Director of Public Prosecutions.
In our report last year “Gas for development or just for money?” we noted that the South Africa company Gigajoule had signed a memorandum of understanding with ENH to investigate the proposed pipeline. Gigajoule (49.6%) and ENH (50.4%) already own Matola Gas Company, which distributes gas from Pande and Temane in Maputo and Matola. Without discussion or explanation, this proposal has been rejected.
We also noted that a pipeline would take all of Mozambique’s share of the gas for a long period, which could prevent the development of industries such as fertilisers and chemicals which would be better for Mozambican industrialisation.
This agreement will be highly controversial, for three reasons:
1) the decision was taken entirely in secret and without explanation or debate;
2) it uses an unknown Mozambican company, Profin, instead of Mozambique’s only operating gas company; and
3) it will probably prevent other uses of the gas which would promote industrialisation and development.
This is probably Mozambique’s largest and most important development decision, and there are a variety of viable options. It is both amazing and unfortunate that the decision has been taken entirely in secret, with no public discussion.
Source: The Hanlon Report
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