THE working visit to the US this month by Mozambican President Filipe Nyusi will potentially cement the country’s position as a major gas producer in Africa, according to industry experts in London.
Currently for investors in the hydrocarbon sector, Mozambique is of great interest following massive discoveries of gas in the Rovuma Basin, estimated at up to 2.5 trillion cubic feet (Tcf), one of the world’s largest gas finds in 10 years.
President Nyusi’s trip to the US has taken him to Houston in Texas, the capital of the US hydrocarbon industry, where he and his team are discussing the future of the sector in Mozambique.
Experts say that this is a critical time for the gas sector in Africa, more so in East Africa where Mozambique has invested heavily in order to secure its territorial waters so that international firms feel safe while working on offshore gas projects.
‘If you are a big hydrocarbon company investing in a big way in Mozambique, you have to ensure that your back is being watched,’ one expert in London told Africa Briefing. In common with other East African countries, Mozambique had found it difficult to convince international oil and gas companies and trade suppliers that its facilities, infrastructure and trade routes were of global standards.
The investment programmes were deemed by Mozambique as necessary in order to establish sovereignty over its own waters and natural resources.
The government believed that by investing in infrastructure, including better surveillance and new patrol vessels, it could both protect its energy assets and effectively combat illegal fishing.
In October 2015, Italian energy firm Eni was awarded an offshore exploration area of about 5,000 square kilometres in the deep waters of the Zambezi River, which flows into the Indian Ocean.
Eni, which has been in the country since 2006, is planning to develop a land-based liquefied national gas (LNG) plant to meet the huge demands of the Asian market.
It is in this light that there have been reports that Eni is planning to sell a multi-billion dollar stake in the project to Exxon Mobil, although both sides have been quiet about the deal that is causing excitement in the industry.
Also, Samsung Heavy is currently in talks with Eni to provide a floating LNG platform in a contract worth $5.4bn.
Then there is the Mamba Complex located in Area 4 in the Rovuma Basin, in which Eni has a 50 per cent stake and is ranked as the world’s fourth biggest offshore gas project with reserves of 85 Tcf – enough to supply Germany, Britain, France and Italy for nearly 20 years.
For Mozambique the Mamba Complex will be a major boost to its economy, which, according to Standard Bank Group, will see a real increase of the country’s gross domestic product (GDP) by 800 per cent by 2035.
The second Africa Small and Marginal Oil Fields Development Conference in London last month highlighted the huge potential in the oil and gas sector in Africa, as the major players in the industry continue to push for deals that will help the continent reap the benefit of its hydrocarbon assets.
Data from America’s Energy Information Administration (EIA) in 2012 showed that Africa had about 124 billion barrels of proven oil reserves and an estimated 509 Tcf of natural gas.
The London conference, organised by Energy and Corporate Africa, which is based in Houston, concentrated on the large number of onshore/offshore small and marginal fields, most of which, having been discovered, have not been developed.
‘Now is the time to plan for investments in sub-Saharan Africa,’ Sunny Oputa, CEO of Energy and Corporate Africa, told the Rigzone website.
The company, which provides consulting and training for energy companies investing in Africa, had organised the Eighth Annual Sub-Saharan Africa Oil and Gas Conference in April in Houston where delegates outlined opportunities for investing in Africa.
At the London conference, participants, paying $1,500 each, were given first-hand information on the potential for developing marginal oil and gas fields in Africa.
Great interest was shown in the development of the sub-Saharan African gas sector, given that it has been viewed as central to providing power to the region where more than 620 million people lack access to electricity.
Industry players and politicians have come to realise that in order to bring more power to the people, African countries need to produce their own gas – instead of depending on exports such as from the US, which can do so because of the boom in its shale gas production.
Experts agree that things, though, are looking up, pointing to the recently completed gas pipeline that runs from Atuabo to Aboadze in Ghana – some 70 miles.
Gas discovered by Tullow Oil Ghana in the Jubilee Field now feeds into a gas fired power plant to generate electricity.
It is estimated that this will save the country more than $500 million a year – money that otherwise would be used to buy crude oil and source natural gas from Nigeria.
The US is currently working with Liberia, Nigeria, Kenya, Tanzania and Ethiopia under President Barack Obama’s Power Africa Initiative, which was launched in 2013 and aims to increase electricity access in sub-Saharan Africa by adding more than 30,000 megawatts of electricity generation.
Namibia and South Africa, too, are looking to use gas for power needs. As the London conference notes, Africa has been recognised as a continent of great promise for hydrocarbon exploration and production. Mozambique is leading the way.
With a high potential and success rate in discoveries and reservoirs, the region is also endowed with significantly large number of onshore/offshore small and marginal fields, delegates at the conference were told. ‘We need to help expose the African market and give investors the right to have good business dealings there,’ Oputa said.
‘The conference is a good platform for investors to understand what foreign investment in Africa entails, and we work with countries there to help explain what foreign investors expect.’