Little-known Mozambique is a somewhat quiet Southern African country, but its oil and gas industry racks some noise globally. The Portuguese-speaking country’s initial exploratory drilling in 2007 uncovered economy-changing volumes of natural gas offshore. Ever since, the nation’s promise of vast natural riches has been on steady growth, enough for Total SA in Mozambique to secure USD 16 Bn to build an LNG (Liquified and Natural Gas) project.
Mozambique is on track to become the world’s fourth-largest natural gas exporter, shaping up to to become one of the next energy superpowers. That is one reason the Total SA LNG project in the country raised funding from a score of financial institutions, regardless of the drawbacks both caused and exacerbated by the coronavirus pandemic.
What’s more, the USD 16 Bn raise—which exceeded its target size despite Covid-19—is almost an equivalent to Mozambique’s economy, whose Gross Domestic Product (GDP) is about USD 14.396 Bn. The company has raised USD 600 Mn more than what it planned, an oversubscription that testifies to the confidence and strength surrounding the project.
The LNG project has been years in the making. Anadarko Petroleum Corporation—a hydrocarbon exploration company headquartered in The Woodlands, Texas—is responsible for the discovery of the first major offshore gas deposit more than 10 years ago. Amidst its struggles to secure long-term buyers from across the world, Occidental Petroleum Corporation—an American hydrocarbon exploration company—acquired the company and sold the gas project to Total in 2019..
It is now common knowledge that Mozambique’s Rovuma Basin, a river in the African Great Lakes region, contains vast reserves of high-quality natural gas. Estimates vary as to the actual size, but a commonly obtained figure is 100 trillion cubic feet (Tfc); that is equivalent to equal to about one quadrillion British thermal units. According to Kyle’s Converter, that is over 10 thousand million of potential oil barrels.
Mozambique’s government expects to raise USD 95 Bn from in natural gas deposits revenue over the next 25 years, and that financial expectation is about 7 times larger than the country’s GDP. Another LNG project being built by Exxonmobil in the Rovuma Basin is also expected to generate USD 46 Bn for the country, while 2 other LNG projects are being developed by Eni SpA and Total.
According to estimates from Standard Bank, other projects, including gas-to-liquid converters and fertilizer plants can benefit from the gas supply and with gas liquefactions facilities involve a sum of USD 125 Bn in investments.
In 2019, large extractive industry projects in contributed USD 1.118 Bn to Mozambique’s tax revenue, marking a fivefold increase from what was recorded in the previous year.