The discovery of substantial natural gas fields in the deep waters of the Rovuma Basin off the northern coast of Mozambique is a game-changer for the country and its people, says Omar Mithá, special economic adviser to Mozambican President Filipe Nyusi.In addition, the ongoing developments in this area over the past ten years have allowed the country to develop a model for its future projects to ensure bankability and feasibility. “The Rovuma Basin model has proven what we need for success – and that is that any project has to be anchored to an export model before any development can take place.” He said synergy between the government and private sector players was just as important. “In the Rovuma Basin we have created many synergies to avoid the duplication of infrastructure and we have seen the companies cooperate very well, sharing the material offloading facilities, the storage sheds, the jetties and the like. Avoiding unnecessary expenditure on infrastructure is important to bring down the unit costs which is especially important in the current economic market setting. It is an absolute must.” He said in pulling off successful projects the country added to its credibility. “We have to face the facts and that is that Mozambique is a poor country with a high debt to GDP ratio. There is massive poverty and a high dependence on donor funding. We are at the mercy of fluctuating commodity prices.” He said in the current volatile market all of the country’s main exports, with the exception of aluminium, were exposed to price volatility in the market. “So the Rovuma Basin model is an appropriate approach where we anchor the project to an export model with economies of scale achieved.” He said considering that it had taken at least five years to build an LNG plant, getting it right was imperative. “Italy’s Eni brought the idea to the table to cement the credibility of the project in the market and therefore fast-tracked their investment for a 3.5-million-tons-per-year floating LNG project in 2017. This project is now under construction and the first vessel sailing is expected in 2022. The sole off taker for the project is British Petroleum,” said Mithá. “If one casts the mind back then you will remember that the economics of this project were not very attractive, but it was fast-tracked and a Final Investment Decision (FID) was reached in 2017, bringing new hope. It changed the tide and created major interest and momentum to attract other players.” This was followed by Total’s 112.8-million-tons-per-annum (MPTA) project that reached FID in 2019, and an ongoing Eni-Exxon Mobil-led 15.2-MTPA Rovuma LNG project. According to Mithá, capital expenditure of about $78 billion is expected to be spent on the development of planned projects in Mozambique between now and 2025 – the highest second capital expenditure on planned upstream projects in sub-Saharan Africa after Nigeria. At the same time investor interest in the gas sector continues to grow with big players trying to get a slice of the pie. Mozambique has discovered 125 trillion cubic feet (TCF) of natural gas at the Rovuma Basin in northern Mozambique. This is said to be enough gas to supply the domestic market, as well as the likes of Italy and Germany, for 15 years.
INSERT: “The Rovuma Basin model is an appropriate approach where we anchor the project to an export model with economies of scale achieved.”– Omar Mithá
