Mozambique LNG projects could have major trade spin-offs for South Africa

6th December 2019

By: Simone Liedtke

Creamer Media Social Media Editor & Senior Writer

     

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Mozambique appears to be on the brink of an economic breakthrough, owing to significant volumes of gas becoming available in the region as the liquefied natural gas (LNG) export projects in northern Mozambique come on line, says Standard Bank oil and gas head for Southern Africa Paul Eardley-Taylor.

He urged South Africa to “consider the psychological . . . and trade impact” of the LNG projects on the relationship between the two countries.

This, he said during a panel discussion hosted by Webber Wentzel last week, was of particular importance, as the LNG projects were raking in up to $60-billion in investment and could potentially employ up to 15 000 people per project.

The massive finds in northern Mozambique, according to PwC’s latest Africa oil and gas review, had already resulted in LNG project developments worth a combined $54-billion and had the potential to turn South Africa’s impoverished neighbour into the world’s third-largest LNG exporter, Engineering News reported earlier this month.

Advisory firm Marques Advisory’s Paris Marques shared Eardley-Taylor’s sentiment and urged South Africa Inc to “just think about the possibilities” that Mozambique’s LNG sector presented.

The psychological impact, in particular, he told delegates, would be seen in Mozambique “asking for some respect” and localisation, especially as the LNG projects had the potential to create “limitless possibilities” in not just infrastructure but also services and agriculture in the surrounding regions.

For SA Inc, however, Marques suggested that businesses consider what they were able to do for Mozambique and provide it with, and, in view of Mozambique’s competence levels in some areas, could partner with local partners and create long-term sustainable investment, which was something that South Africa could benefit from, considering Mozambique’s need for growth and its geographic proximity.

However, he urged delegates and potential investors to “do as much research as possible” about what Mozambique was doing and offering before making a final decision to invest in the country.

Law firm Linklaters global energy and infrastructure group partner Francisco Ferraz de Carvalho, meanwhile, in his closing presentation, said Mozambique’s LNG opportunities would also provide domestic gas opportunities, both direct and indirect, as well as an opportunity for South African investors.

While investing in Mozambique might be challenging and potential investors were being urged to be cautious, he added that the country was worth considering as an investment destination, if the right partners and advisers were involved in the investment process.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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