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East Africa

Mozambique: resource curse or opportunity?

growing, calling the country’s resources says. Local content is a huge topic in sev-

Mozambique is thought to be the “ a world-class amount of gas.” However, eral countries including Brazil, Ghana, jewel in East Africa’s crown, but

Fryklund feels it is a race to monetize Nigeria, and Angola. Fryklund cites will its abundant gas resources those rich resources. “That’s where the Nigeria and Ghana in particular for set- curse comes in,” he said. “People are try- ting high local content requirements 45% pay of for the country? ing to get in there frst.” and 50%, respectively.

Audrey Leon reports.

Fryklund continued, telling the OTC “Many countries are reconsidering local audience that with 30 million tons of content. Nigeria set a record with Egina ozambique, with all its LNG at stake, East African LNG needs to – 45%, but it needs to be competitive natural beauty and mas- be priced competitively. When compared and sustainable,” he urges. “When these

M sive resources, has been a to Qatar, the Middle Eastern country’s gas projects fnish and work is done, you’re hot topic in the industry for some time. is still the cheapest. unemployed. Not a problem if you have

While the country is recognized for being “You have the US, Canada, West Africa more projects lined up – this is where one of the fastest-growing economies, all coming up. There’s such a thing as competitiveness comes in.” with 7.6% growth in GDP in 2013, it still ‘mega-project disease,’ Fryklund says.

The future has plenty of challenges. “We’re competing against ourselves.

Ana Maria Raquel Alberto, com- We’re trying to do so much at the same In May, Italy’s ENI touted Mozambique’s mercial counselor for the Embassy of time: Using the same people, technology, latest fnd: a 25m gas column in good-

Mozambique, told attendees at this year’s EPC contractors.” quality Paleocene reservoir sandstones

Offshore Technology Conference (OTC) was discovered by the Agulha 2 well

Resource paradox in Houston, that despite challenges in Area 4, which ENI operates through that include poverty, qualifed workers, However, Fryklund believes governments ENI East Africa (70%). The fnd also training, and infrastructure, the country that fnd a way to balance maximizing confrmed the southern extension of the desires to be an attractive partner with their investments and taking care of their feld. Total resources discovered in Area industry. “We want Mozambicans to be local workforces will do well, and cites 4 are estimated at 85Tcf. employed by your companies,” she says. Norway as an example. Currently, several Houston-based Anadarko and ENI have

While Mozambique is energy resource East African governments, including teamed up to develop a two-train onshore rich, only 12% of Mozambique’s popula- Mozambique and Tanzania, are revising LNG facility at Afungi in Palma, located tion has access to electricity, according regulations and production agreements. in the Cabo Delgado province, by 2018. to World Bank data. Power transmission “Many governments in East Africa are The partners eventually aim to have a and remoteness are two key challenges going through debate on whether they capacity for 50MTPA of LNG.

that Mozambique needs to address, should increase fscal take now or choose Fryklund says what Anadarko and according to IHS’ Chief Upstream a more balanced approach,” Fryklund ENI are doing is the right idea because

Strategist Bob Fryklund, who also while they own their own trains spoke at OTC. “Mozambique has and resources, uniting to build a way to go; that’s why we see an onshore LNG facility will cut

FLNG as a production option. The down on costs. He noted a similar remoteness is a challenge.” project, Atlantic LNG in Trinidad and Tobago, serves as a model

Resource curse for this type of project. Current

In his presentation, Fryklund owners BP, BG Group, Shell and discussed the possibility of Trinidad and Tobago LNG hold

Mozambique falling victim to the stake in the four-train Atlantic resource curse. “Mozambique is LNG facility, which has a total pro- in a race to fgure out what to do duction capacity of 15MPTA.

In April, ENI announced a pre- with its resources, asking should

FEED for two 2.5MTPA foating it be available for domestic use or

LNG facilities to produce from its export,” he says.

Mamba gas feld. An investment

Fryklund estimated that decision is expected next year. ENI

Mozambique contains oil said investments in Mozambique resources of 2.5MMbbl, and natu-

IHS’ Chief Upstream Strategist Bob Fryklund addresses the could tally up to US$50 billion. ral gas resources of 200Tcf and 2014 Ofshore Technology Conference. Photo: Audrey Leon/OE.

oedigital.com July 2014 | OE 63 063_OE0714_MOZ.indd 63 6/20/14 12:50 PM