12 °c
London
Thursday, June 1, 2023
No Result
View All Result
FurtherAfrica
  • Countries
    • Angola
    • Botswana
    • Cape Verde
    • DRC
    • Eswatini
    • Ethiopia
    • Kenya
    • Malawi
    • Mauritius
    • Mozambique
    • Namibia
    • Nigeria
    • Rwanda
    • South Africa
    • Tanzania
    • Uganda
    • Zambia
    • Zimbabwe
  • Interviews
  • Understanding
  • Videos
  • Travel
  • Weekend
  • About
FurtherAfrica
  • Countries
    • Angola
    • Botswana
    • Cape Verde
    • DRC
    • Eswatini
    • Ethiopia
    • Kenya
    • Malawi
    • Mauritius
    • Mozambique
    • Namibia
    • Nigeria
    • Rwanda
    • South Africa
    • Tanzania
    • Uganda
    • Zambia
    • Zimbabwe
  • Interviews
  • Understanding
  • Videos
  • Travel
  • Weekend
  • About
No Result
View All Result
FurtherAfrica
No Result
View All Result
Home Economy

Analysis: A Sign of Life From Mozambique’s Energy Sector

FurtherAfrica by FurtherAfrica
March 3, 2016
in Economy, Energy, FDI, Gas, Mozambique, Natural Resources, South Africa
Reading Time: 3 mins read
1.7k 35
0
Share via QRWhatsappShare on FacebookShare on TwitterLinkedInPinteresteMail

Low oil prices and a weak global economy have thrown a wrench in many countries’ plans to develop and exploit their untouched energy resources. But for Mozambique, those plans may be back on the table.

On March 1, an energy consortium signed a cooperation agreement to construct a pipeline that will stretch from Mozambique’s massive offshore natural gas fields to northern South Africa. Though the deal is just an early step toward the pipeline’s actual completion, it could be a sign of progress to come for both countries’ energy sectors.

The consortium responsible for building the pipeline comprises Mozambique’s Empresa Nacional de Hidrocarbonetos (ENH), South Africa’s SacOil, the Netherlands’ Profin and the China Petroleum Pipeline Bureau. In their agreement, which builds on an initial deal struck in December 2014, the four companies committed to the funding needed to complete the project’s pre-investment and engineering studies, as well as the pipeline’s construction and operation. According to project estimates, the 2,600-kilometer (1,600-mile) pipeline will cost approximately $6 billion.

The China Petroleum Pipeline Bureau will shoulder 70 percent of that total cost by securing funds from Chinese financial institutions. For the state-owned China National Petroleum Corp., of which the China Petroleum Pipeline Bureau is a subsidiary, the pipeline is an opportunity for the company to increase its profits from its energy assets in Mozambique. The company currently holds a 10 percent stake in one of Mozambique’s potentially lucrative offshore natural gas blocks. However, as is true of the rest of Mozambique’s offshore reserves, obstacles have prevented the block from being fully developed.

Constrained by Economic Realities

This speaks to a broader problem for Mozambique: The country has considerable natural gas reserves, but it cannot tap into them on its own. Instead, it must rely on Anadarko Petroleum Corp. and Eni, the biggest foreign energy companies operating within its borders. Together, the two hold adjacent blocks in Mozambique’s enormous deep-water Rovuma Basin that are estimated to contain at least 4.5 trillion cubic meters of recoverable natural gas reserves.

Anadarko and Eni are seeking ways to develop these resources, but their efforts are being complicated by expectations of a boom in U.S. and Australian natural gas exports. Mozambique’s energy reserves are located relatively far from the country’s existing infrastructure, and its energy sector has few capabilities of its own. Consequently, the companies’ attempts to build the infrastructure needed to produce and transport Mozambique’s offshore natural gas have been massive undertakings. Such projects may have made sense when liquefied natural gas (LNG) prices were higher, but with prices now close to $7 per million British thermal units, they will be much more difficult to complete.

Instead, Anadarko and Eni have turned to parsing their projects into phases, rather than tackling them in one fell swoop. To that end, the two companies have agreed to develop 24 trillion cubic meters of natural gas that lie along the shared border of their adjacent blocks. Once those reserves have been produced, they will enter into a joint venture to develop the rest of their blocks’ remaining resources. As part of this plan, Eni is exploring the option of constructing a floating LNG export facility that would be relatively cheap and manageable in size. The Mozambican government approved the project in February.

However, the companies’ strategy to develop Mozambique’s offshore resources hinges on their ability to secure buyers for their natural gas. BP has agreed to buy all of the LNG that would come from Eni’s floating export facility, and Anadarko has managed to sign agreements covering some 90 percent of its initial output. But none of these deals are binding, meaning neither company has eliminated the risks they are incurring by pursuing the projects.

This is where the pipeline deal may make a difference in Anadarko and Eni’s calculations. If finished, it would connect Mozambique to the only natural gas market in southern Africa that has the potential to grow in the coming years. (South Africa is the most industrialized country in the region, but its industries have not made much use of natural gas because they lack a reliable supply.) It would also provide a less challenging way to transport natural gas to consumers than shipping it in the form of LNG.

The pipeline may be the solution to some of Pretoria’s problems as well. South Africa’s energy sector relies on coal and is plagued by intermittent blackouts. Natural gas may offer a more stable source of energy for the country’s new coal-fired power plants, particularly as South Africa shifts away from coal to address some of its persistent environmental concerns. Though the country boasts its own shale resources, they have proved difficult and costly to develop.

The latest pipeline deal is not yet finalized, and several financial roadblocks still lie in its path. But if the project is completed, it could open up many new opportunities for the Mozambican and South African energy sectors, fueling their economies in the years to come.

Source: Stratfor

Related

Tags: AnadarkoChina Petroleum Pipeline BureauENHENIGasLNGMozambiquepipelinePretoriaProfinrovumaSacOilSasolモザンビーク莫桑比克
ScanSendShare691Tweet432Share121Pin155Send
FurtherAfrica

FurtherAfrica

Founded in 2015 FurtherAfrica is an online platform centralising news and content focusing on the development and growth story of the African continent.

Related Posts

Energy

Top 5 licensing rounds to watch in West Africa

by Energy Capital & Power
June 1, 2023
Economy

IMF program restoring some confidence in Ghana’s economy

by FurtherAfrica
May 31, 2023
Energy

5 ways Nigeria can advance its hydrogen market

by Energy Capital & Power
May 31, 2023
Energy

Angola ANPG keeps focused on business environment

by FurtherAfrica
May 31, 2023
Logistics

Mozambique Beira Port lead containers in Southern Africa

by Club of Mozambique
May 31, 2023
Platform Africa 2023
 
Mozambique eVisa
 
MozParks
 

Translate this page

Read the Latest

Finance

AFC secures US$625M syndicated loan with new lenders from middle east and asia

by Fabio Scala
June 1, 2023
0

This latest funding is a testament to the Corporation's resilience and exceptional creditworthiness in a challenging macroeconomic environment of rising...

Read more

Top 5 licensing rounds to watch in West Africa

June 1, 2023

IMF program restoring some confidence in Ghana’s economy

May 31, 2023

5 ways Nigeria can advance its hydrogen market

May 31, 2023

Ethiopia students finish 3rd at global Huawei ICT competition in China

May 31, 2023

FurtherAfrica Partners Network

The Exchange Farmers Review Africa 360 Mozambique
TechGist Africa Energy Capital & Power Club of Mozambique
Taarifa Rwanda Web3Africa See Africa Today
Africa Global Funds Novafrica CrudeMix Africa
Harambee Africa Botswana unplugged Financial Insights Zambia
O Económico Digilogic Africa  

Subscribe to FurtherAfrica

Enter your email address to receive new articles on your email.

Join 107,190 other subscribers.
FurtherAfrica

© 2021 FurtherMarkets

FurtherAfrica is a FurtherMarkets Limited platform

  • Countries
  • Interviews
  • Understanding
  • Videos
  • Travel
  • Weekend
  • About

Follow Us

No Result
View All Result
  • Countries
    • Angola
    • Botswana
    • Cape Verde
    • DRC
    • Eswatini
    • Ethiopia
    • Kenya
    • Malawi
    • Mauritius
    • Mozambique
    • Namibia
    • Nigeria
    • Rwanda
    • South Africa
    • Tanzania
    • Uganda
    • Zambia
    • Zimbabwe
  • Interviews
  • Understanding
  • Videos
  • Travel
  • Weekend
  • About

© 2021 FurtherMarkets

Welcome Back!

Login to your account below

Forgotten Password?

Retrieve your password

Please enter your username or email address to reset your password.

Log In
This website uses cookies. By continuing to use this website you are giving consent to cookies being used. Visit our Privacy and Cookie Policy.
Are you sure want to unlock this post?
Unlock left : 0
Are you sure want to cancel subscription?