Exxon, Total resume heavy investment in Mozambique as oil majors exit Nigeria
US energy giant Exxon Mobil Corporation is looking to restart its gigantic gas project in Mozambique which could open the way to investment in excess of a hundred billion dollars at a time western oil companies are exiting Nigeria.
In a statement published last week in Mozambican newspaper O Pais, Exxon called for expressions of interest to design and build an LNG plant producing as much as An 18 million tons a year. An earlier plan envisaged a 15.2 million-ton project but Exxon and its potential partners are now looking to raise their stake on the back of improved fiscal terms that help to shine the light on how so badly Africa’s top oil country is failing to keep or attract investment into a once lucrative oil industry of a country of 200 million people.
Exxon’s announcement comes after TotalEnergies SE said last month that it’s considering restarting its own LNG export venture Mozambique’s Cabo Delgado province. The projects were halted two years ago following an attack on the town of Palma, but a mix of local and foreign troops have since made progress in containing the violence that’s left more than 4,600 people dead.
The LNG projects offer an economic lifeline for impoverished Mozambique, with potential investments exceeding the southern African nation’s annual output.
Exxon is part of a consortium with Eni SpA of Italy, which in November exported Mozambique’s first LNG production from a floating vessel offshore. That plant has an annual capacity of 3.4 million tons.
The much larger onshore project being planned would involve modules of 1.5 million tons, according to the company’s statement. The deadline for submitting expressions of interest is the end of this month.
“Modular is attractive, and potentially the best solution in Mozambique, from the standpoint that it offers the opportunity to build at scale while also mitigating some of the security risks during construction,” said Alex Munton, director of global gas service at Rapidan Energy Group.
The Mozambiquan government expects to pocket about $96 billion over the next quarter-century from three liquefied natural gas plants that would turn Mozambique into a leading exporter of the fuel.
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Mozambique which is desperate to avoid pitfalls like those holding Nigeria down, will establish a sovereign wealth fund to manage the income, which could go a long way toward improving roads and ports and access to health and education.
As much as $120 billion in investment could be heading to Mozambique, according to Standard Bank Group Ltd., Africa’s largest lender.
The planned gas projects are expected to be a game-changer not just for Mozambique, where almost two-thirds of its 32 million people live on less than $1.90 a day, but potentially for neighboring countries as well. Besides providing a massive boost to state finances, it would also create several thousand construction jobs. Gas production could also bring changes that would address chronic electricity shortages and boost fertilizer production to drive crop output.
In April of 2021, Total declared force majeure on its multibillion-dollar LNG development in Mozambique after an escalation in attacks by Islamist insurgents forced the mothballing of Africa’s biggest private investment.