Maputo, 21 Feb (AIM) – The Mozambican government believes that, by 2030, the country’s economy will be growing at an annual rate of around ten per cent – but only if the major liquefied natural gas (LNG) projects are coming on stream.
Figures released by the government on Wednesday showed that economic growth fell from 2.3 per cent in 2019 to minus 1.1 per cent in 2020, a collapse largely due to the Covid-19 pandemic.
After the pandemic, there was a substantial recovery to 4.15 per cent in 2022 and five per cent in 2023. The projection for this year is growth of 5.56 per cent, rising to 7.2 per cent in 2026, and 8.5 per cent in 2028.
By 2030, the annual growth rate will have reached almost ten per cent. But this is dependent on the LNG projects.
Two major gas liquefaction projects are stalled. In April 2021, the French oil and gas company, TotalEnergies, declared force majeure to suspend all activities on its LNG project, due to a major raid by islamist terrorists against the town of Palma.
In January, the management of TotalEnergies expressed its willingness to resume operations in Area One of the Rovuma Basin as a result of an improvement in security conditions. But this was before the recent upsurge in jihadist raids over the past couple of weeks, and no firm date has been given for TotalEnergies resuming work in Cabo Delgado.
The second project is the investment, still not formally announced, led by the US giant oil and gas company, ExxonMobil and the Italian energy firm Eni, in offshore Area Four of the Rovuma Basin. Exxon Mobil is still undecided about announcing a Final Investment Decision.
A third completed, smaller project also belongs to the Area 4 consortium and consists of a floating platform to capture and process gas for export, directly at sea, which started up in November 2022.The floating platform is expected to produce 3.4 million tonnes per year (mtpa) of liquefied natural gas.
Area 1 is aiming for 13.12 mtpa and the onshore plan for Area 4 predicts 15 mtpa. Hence all three projects, when operating at full strength, could produce around 31.5 mtpa.
The American Financial Consulting firm Deloitte believes that Mozambique’s natural gas reserves represent potential revenue of 100 billion dollars.
“The country’s vast gas reserves could make Mozambique one of the world’s top ten producers, responsible for 20 percent of Africa’s production by 2040”, according to a 2024 Deloite report on Africa’s energy prospects.
But these rosy prospects are dependent on security. Unless they are satisfied with the security conditions, TotalEnergies will not resume work, and ExxonMobil will not commit itself.
The government’s figures also showed how dependent the Mozambican GDP is on mining. Growth in mining (in annual terms) was 10.55 per cent in 2022, rising to 32.58 per cent in the first quarter of 2023 and 42.71 per cent in the second quarter of the year.
No other sector of the economy came anywhere near this growth rate, and several sectors declined. Thus the building industry fell by 10.31 per cent, manufacturing industry by 7.77 per cent, and fisheries by 9.16 per cent.
Overall, real GDP grew by 4.17 per cent in the first quarter of 2023 and by 4.67 per cent in the second quarter.
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