Galp Chief Executive Officer Andy Brown admitted yesterday that China could replace Western finance in oil and gas projects like those in Mozambique, given the growing institutional opposition to investments in fossil fuels.
“There are countries that are going to get this product,” he said, alluding to the liquefied natural gas to be produced in the north of Mozambique, and citing China as the prime example.
China wants “to urgently replace coal with gas for environmental reasons, and I imagine they would be interested in investing in this type of project,” as do other banks and countries, Brown told Lusa in Mozambique in comments relating to Galp’s stake in Area 4 of the Rovuma basin.
“Funding for oil and gas projects is becoming more difficult, but not everyone subscribes to [the position of] not investing” in the sector,” he said, referring to Western financiers in the wake of the climate summit recently held in Glasgow.
“I don’t believe that [after] the announcement at COP26 … means there is no chance for funding. The world still needs a lot of oil and gas,” he reiterated.
Brown advocates a gradual energy transition from coal to gas and then to renewables, with governments, companies and society as a whole managing the transition without the population being burdened “with very expensive energy”, while at the same time protecting the climate.
In April, seven European countries, including France, Germany and the UK, announced that they were suspending public funding for fossil fuel projects abroad. That was after Norway’s sovereign wealth fund, the world’s largest, last year sold stakes in major mining and energy companies due to environmental concerns.
Major international development banks such as the World Bank, the International Monetary Fund and the African Development Bank have been scaling back funding for fossil fuel investment projects.
Questioned by Lusa about Galp’s position on onshore Area 4 investments, which have been successively postponed by ExxonMobil, leader of the process, Andy Brown was clear:
“We want to develop this project”.
The Area 4 consortium – in which Galp has a 10% stake – “will look to launch” the investment“ but only when security is guaranteed” in Cabo Delgado, he said, in a reference to the armed insurgency that has affected the province for the last four years and which led to the suspension of investment by French oil company Total in March.
“The government is making progress and that is important for investment,” Brown concluded.
The Galp CEO on Wednesday took part in the inauguration of renovation work at a cooking gas filling plant in Matola, on the outskirts of Maputo, which has doubled production to 1,200 bottles per hour.
He cited this €10.6-million investment as an example of energy transition: the bottles can replace charcoal, which is predominant in Mozambican homes, with gas being cheaper for families and moreover unlinked to deforestation.
It takes between six and nine trees to obtain a typical 50kg sack of charcoal of the type sold for 1,500 meticais (€21) by the roadside in Mozambique, while an 11-kilo bottle of cooking gas costs around 800 meticais, with less waste and an energy yield several times higher.