Gas Boom Worth $5.2 Billion a Year to Mozambique by 2026

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--Mozambique's minerals minister Esperanca Bias, speaking at the "Natural Gas Master Plan" workshop in the capital Maputo last week, said that the country had the potential to earn $5.2 billion annually from natural gas by 2026, adding that the gas sector could create over 70,000 jobs.

The 100-trillion-cubic feet (or even possibly 150-trillion-cubic feet) reserves of liquefied natural gas (LNG) could sustain the construction of 10 LNG plants over the next decade. According to the minister, product could be exported to the Far East. Current reserves are mainly in the concessions held by Anadarko Petroleum Corporation (NYSE:APC) (The Woodlands, Texas) and ENI SpA (NYSE:E) (Rome, Italy). Current reserves are estimated to hold 50% of potential discoveries in the Rovuma Basin off the Indian Ocean coast of the country's northern province of Cabo Delgado.

Aires Aly, Mozambican prime minister, said that the huge resource should be handled in such a way to optimize benefits for the Mozambican society, including the growth of institutional capacities in public and private sectors, the development of roads and other infrastructure and an expansion in access to training and to employment.

"The master plan implies the clear definition of the cycle of production and of transport of the gas. It implies defining how much of the gas will be reserved for generating electricity, how much for conversion into urea, ammonia, methanol and other derivatives for the production of fertilizer, and how much will be used as fuel," said Aly.

A series of mega-projects could be built in the country based on gas production. One of the challenges to enable the successful exploitation of the gas resource is the transportation of the product from the far north to the center of economic activity around Maputo. An 850-kilometer pipeline is already in operation from Temane to Sasol's (NYSE:SSL) (Johannesburg, South Africa) synfuel plants at Secunda in South Africa.

Of the 12 exploration and production sharing contracts that have been signed by the government so far, five are in the Rovuma Basin. The country has several sedimentary basins with the geological potential for gas and oil resources. In addition to the offshore gas reserves, it is possible that large resources of coal-bed gas may also be found in Tete province in the northwest of the country where mining projects have started on one of the world's largest untapped coal reserves.

In order to control and utilize the effect of the enormous wealth potential for the country, some consideration is being given to a Norwegian type sovereign wealth fund or a national development bank owned by the government.

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