The first of the two major natural gas projects will make Mozambique a major energy producer in the world, with Asia and especially China being the main market for the product.
Launched in early June, the Coral Sul natural gas exploration project will have US$4.8 billion in funding from 15 banks, three of which from Mozambique and the remainder foreign banks, with the coverage of five export credit agencies, including the Export and Import Banks of China and South Korea, Servizi Assicurativi del Commercio Estero (SACE SpA), Italy, and Compagnie Française d’Assurance pour le Commerce Extérieur (Coface), according to the most recent edition of Mozambican weekly newspaper Savana.
Italian group ENI holds a 50% stake in this project, China National Petroleum Company is the second largest shareholder, with 20% and Kogas (South Korea), Galp Energia (Portugal) and Empresa Nacional de Hidrocarbonetos (Mozambique) have 10% each, with the entry into the consortium of US group ExxonMobil now being finalized.
In addition to the formal launch of the project, all the contracts have been signed, namely those for construction and placement of the production platform and the documents relating to the regulatory framework and financing of the project, during a ceremony attended by the President of the Republic, Filipe Nyusi.
The chief executives of ENI, Claudio Descalzi and the China National Petroleum Corporation (CNPC), Wang Yilin also attended the ceremony.
The Coral Sul project is the first to be developed in the Rovuma Area 4 Block, which contains reserves estimated at 450 billion cubic meters (16 trillion cubic feet), and the gas to be extracted and liquefied has already been sold to the BP group.
The investment decision of the other consortium involved in the development of the natural gas industry in Mozambique, led by US group Anadarko Petroleum is expected next year.
The Economist Intelligence Unit (EIU) recently stated that the natural gas industry has “the potential to be a major engine of economic growth” for Mozambique and should begin to be reflected in this indicator as early as 2018.
However, natural gas production at “significant” levels is expected to occur only after 2021, given the “technical and regulatory complexity of the projects,” the EIU said in its latest report on Mozambique.
These projects, according to the EIU, are behind the government’s effort to approach Asian countries, “in particular China, a large creditor of Mozambique,” as well as gas and coal importing countries such as India, Japan and Thailand, which have companies that are “investing heavily” in the country.
The Africa Monitor newsletter recently reported that revenues from sales of consortium stakes – the first of which worth about US$350 million from the Exxon Mobil group – are also particularly important to the government.
Given the current financial shortcomings, which have been widening due to declines in traditional partners’ aid and a slowing the economy, revenues such as the sale of part of the ENI group’s share, alleviate the situation, although they do not solve it completely, according to the EIU.
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