South Africa Pledges to Boost Mozambique’s Economy through Gas
South Africa’s Trade and Industry Minister Rob Davies has pledged to support an industrial renaissance in Mozambique, on the back of gas extraction. But his remarks may also suggest that Mozambique's richer neighbour knows it has competition from other countries willing to invest there.
In an opinion piece in South African business daily Business Report on September 27, Davies said that the nations of Southern African Development Community (SADC) must work more closely together, and he highlighted a new accord just launched with Mozambique with exactly this aim.
“The agreement signed a few days ago between Mozambique and South Africa shows the way towards realising mutually beneficial long-term developmental opportunities.
“One such key opportunity lies in working with Mozambique to dramatically increase the levels of local content that can be spun off from operationalising the world-scale gas fields of the Rovuma Basin.
“Estimates of expenditure on this gas field over the next decade are in the region of $20bn-$30bn. Much of the investment will go into direct engineering works such as sub-sea structures, drilling operations, floating LNG vessels, extraction pipelines and liquefaction processing facilities.
“All this production investment must also be matched by the development of supportive infrastructure and services: an airline runway, kilometres of new quay-side and harbour infrastructure, new accommodation villages, clinics, shops and leisure facilities.”
Davies emphasised the mutual self-interst in this approach, saying his country could support development opportunities in Mozambique “and at the same time support our firms in accessing them."
“But this will also require our private sector to take a principled long-term perspective. This would mean willingness to co-ordinate strategies both with the government and with other South African companies; and - most importantly - learning to work sensitively for genuine mutual benefit with our counterparts in the region,” the minister added.
He suggested that SADC and Africa are entering a new era, where infrastructure is improving, and governments are increasingly aware of the need to work with industry, and not against it. He asserted that South Africa can and must play a central role in regional development as the most industrialised economy in the region.
His remarks perhaps suggest that new investors and countries are competing with South Africa for opportunities in Mozambique. Investments by Italy's Eni and its Chinese and South Korean partners are expected soon to start entering Mozambique. On June 1 when investment in Eni's floating LNG project was confirmed, Italy's ambassador to Mozambique described his country as already Mozambique's leading European investor.
Davies refers to the world-scale offshore Rovuma basin gas fields: there US firm Anadarko and its partners have discovered some 75 trillion ft3 (2.12 trillion m3) of recoverable natural gas resources in offshore Area 1, while Eni and partners have discovered a further 85 trillion ft3 (2.4 trillion m3). Eni's floating LNG project will start producing in 2022, although it could be several years before subsequent offshore Rovuma gas projects start producing through onshore LNG export ventures.
South Africa’s Trade and Industry Minister Rob Davies, (c) John Fraser
John Fraser