Mozambique Risks Economic Stability Over Russian Oil


By Kestér Kenn Klomegâh

Mozambique risks destabilizing its economy and further losing western development finance if it goes ahead to purchase sanctioned oil from Russia.

With the return of western development finance institutions such International Monetary Fund (IMF), World Bank and the USAID, and currently showing tremendous support for sustainable development projects and programmes, Mozambique would have to stay focused and stay clear of the complexities and contradictions of the Russia-Ukraine crisis.

Mozambique needs to seriously concentrate on and pursue its plans of exporting liquefied natural gas (LNG), extracted from the Coral South field, off the coast of Palma district, in the northern province of Cabo Delgado, possibly starting this October. It marks an economic turning point and opens a new chapter for its revenue sources.

According to our research, Mozambique will become the first country in East Africa to export LNG. It will be produced on a floating platform, belonging to a consortium led by the Italian energy company, Eni. The platform, built in a Korean shipyard, arrived in Mozambican waters in January and is now anchored in Area Four of the Rovuma Basin, some 40 kilometres from the mainland.

This is the first deep-water platform in the world to operate at a water depth of about two thousand meters. The Coral South project is expected to produce 3.4 million tons of LNG per year over its estimated 25-year lifespan.

A second project is planned for Area One of the Rovuma Basin, where the operator is the French company TotalEnergies. The planned LNG plants for this project, are onshore, in the Afungi Peninsula of the Palma district. The jihadists seized Palma town in March 2021, and TotalEnergies withdrew all of its staff from the district. Subsequently, the Mozambican defence and security forces and their Rwandan allies drove the terrorists out of both Palma and the neighbouring district of Mocimboa da Praia.

The current global economic situation is changing, and competition and rivalry for markets are also at their height. During the past months, Russia has cut its export of gas as a reciprocal action against European Union members and has redirected its search for new clients in the Asian region. It has already offered discounted prices to China and India, and now looking beyond Africa.

United States Special Envoy to the United Nations, Thomas-Greenfield, has made one point clear in her speeches with African leaders that “African nations are free to buy grain from Russia but could face consequences if they trade in U.S.-sanctioned commodities such as oil from Russia.”

“Countries can buy Russian agricultural products, including fertilizer and wheat,” Linda Thomas-Greenfield said. But she added that “if a country decides to engage with Russia, where there are sanctions, then they are breaking those sanctions. We caution countries not to break those sanctions because then … they stand the chance of having actions taken against them.”

Russian Ambassador to Mozambique, Alexander Surikov, after a meeting with the Confederation of Economic Associations of Mozambique (CTA), had proposed that the Mozambican authorities could buy Russian oil in roubles after Moscow presented the option to Maputo. Ambassador Surikov further expressed Russian companies’ continuing interest in investing in Mozambique. Likewise, the possibility was raised of Russia opening a bank in Mozambique focused on supporting bilateral trade and investment.

Russia previously had a VTB bank in Maputo, later involved in opaque deals. It was a financial scandal involving three fraudulent security-linked companies, and two banks – Credit Suisse and VTB of Russia, relating to illicit loan guarantees issued by the government under former President Armando Guebuza. Until today, it is popularly referred to as the “Hidden Debts” scandal involving US$2.7 billion (€2.3 million), the financial scandal that happened in 2013.

In the aftermath, financial institutions exited, projects were abandoned and this southern African country has struggled to rebound economically. Now they are returning with new financial assistance programmes that would promote sustainable and inclusive growth and long-term macroeconomic stability.

In the context of the current cereal crisis, one other issue that the ambassador raised was how Mozambican companies could have direct access to Russian wheat suppliers. In this regard, it was not clear how Russian wheat would enter the market and how it would be paid for because Mozambique uses principally the US dollar in its foreign transactions, and Russia cannot conduct transactions using the US currency due to the sanctions imposed following the invasion of Ukraine.

“The rouble and the medical are worthy currencies that do not need the benevolence of some other countries that control the international system,” the Russian diplomat explained, adding that Moscow wanted to strengthen cooperation with Maputo.

Nonetheless, Minister of Mineral Resources and Energy of Mozambique, Carlos Zacarias, admittedly the possibility of buying Russian oil in roubles. “I am sure that we will study and verify the feasibility of this offer from Russia. If it is viable, for sure Russian oil will be acquired in roubles,” Carlos Zacarias said.

Mozambique’s receptivity to the Russian proposal stems from the fact that the world is experiencing a peculiar moment, characterized by great volatility in oil prices on the international market as a result of the Russia-Ukraine war.

Mozambique was among the countries that abstained on two resolutions that were voted on by the General Assembly of the United Nations, one condemning Russia for the humanitarian crisis in Ukraine as a consequence of the war and the other suspending Moscow from the Human Rights Council.

The Mozambican Liberation Front (Frelimo, the ruling party) was an ally of Moscow during the time of the former USSR and received military support during the struggle against Portuguese colonialism and economic aid after independence in 1975.

Mozambique and Russia have admirable political relations. Mozambique has to focus on trade and economic development with external partners. According to data provided by CTA, the annual volume of economic transactions between Mozambique and Russia is estimated to be, at least, US$100 million (€98.5 million at current exchange rates).

Experts aptly point to the fact that there is a tremendous opportunity window for Mozambique. With partners including ExxonMobil Corp., China National Petroleum Corp. and Mozambican state-owned Empresa Nacional de Hidrocarbonetos, Mozambique has to move towards its own energy development. These past few years, experts have also reiterated adopting a suitable mechanism, mapping out strategies and utilizing financial support for sustainable development.

Mozambique has considerable gas resources and the right decision is to move toward both an onshore concept and an offshore concept. The ultimate goal has to establish connectivity between its resource exploration and national development. The idea is to foster economic relations based on its domestic development priorities. And consequently, it has to determine influential external investment partners ready to invest funds and, in practical terms, committed to supporting sustainable development in the country.

The Mozambique LNG offshore project, valued at around $20 billion, aims to extract about 13.12 million tonnes of recoverable gas over 25 years and generate profits of US$60.8 billion, half of which will go to the Mozambican state.

The process to achieve this task has started and would generate 14,000 possible jobs in phases – first creating 5,000 jobs for Mozambicans in the construction phase and 1,200 in the operational phase, with a plan to train 2,500 technicians and so forth. These projects also have a great capacity to create indirect jobs, with foreign labour decreasing throughout the project and Mozambican labour increasing. Most of these jobs are expected to be provided by contractors and subcontractors.

Several corporate projects came to a halt due to armed insurgency in 2017 in Cabo Delgado province. The entry of foreign troops to support Mozambican forces in mid-2021 has improved the security situation. Since July 2021, an offensive by government troops was fixed, with the support of Rwandans and later by the Standby Joint Force consisting of forces from members of the Southern African Development Community (SADC).

Cabo Delgado province, located in northern Mozambique, is rich in natural gas. Although the gas from the three projects approved so far has a destination, Mozambique has proven reserves of over 180 trillion cubic feet, according to data from the Ministry of Mineral Resources and Energy. With an approximate population of 30 million, Mozambique is endowed with natural resources. It is a member of the Southern Africa Development Community (SADC) and the African Union.

Related Stories

Gabon: New Leader Promises Reforms After Ali Bongo Ouster

By Adedapo Adesanya The leader of the coup that ousted Gabon’s President, Mr Ali Bongo, Mr Brice Oligui Nguema, has promised to bring reforms as he was sworn in as interim president of the central African country on Monday. In Africa’s ninth coup in three years, army officers led by Mr Nguema (a general) seized power on August 30, minutes after an announcement that Mr Bongo had won his third term election in his 14 years as president. According to reports, Mr Nguema, a cousin of the deposed Garbonese leader, was given a standing ovation by military officers and officials


Adesina Seeks More Investment in Africa’s Renewable Energy

By Adedapo Adesanya African Development Bank (AfDB) President, Mr Akinwumi Adesina, has called for investments in renewable energy in Africa, pointing out the continent’s rich energy mix. In his keynote address (on September 4) during a session on Harnessing Africa’s renewable energy potential’, held at the ongoing Africa Climate Summit in Nairobi, Kenya, Mr Adesina stressed that “Every economy can only go as far as the energy it produces.” Mr Adesina underlined Africa’s tremendous potential in energy—from hydro and wind power, solar, to geothermal—which remains untapped in the face of a staggering electricity deficit on the continent. Africa has an


Afreximbank Seeks Development of Export Trading Companies to Boost SMEs

By Adedapo Adesanya The African Export-Import Bank (Afreximbank) has called on African countries to prioritise the development of public and private export trading companies (ETCs) in order to position the continent’s small and medium enterprises (SMEs) to participate effectively in global trade. This was a core message in an address to the Africa International Exhibition on the sidelines of the United Nations General Assembly in New York by Mrs Kanayo Awani, Afreximbank’s Executive Vice President, Intra-African Trade Bank, speaking on behalf of Bank President Mr Benedict Oramah. She said that SMEs participating directly in global trade face stiff competition from


Shettima to Represent Nigeria at 15th BRICS Summit in Johannesburg

By Adedapo Adesanya  The Vice President, Mr Kashim Shettima, has departed Abuja for Johannesburg, South Africa, to represent President Bola Tinubu at the 15th BRICS Summit of Heads of State and Government. BRICS, an acronym for Brazil, Russia, India, China and South Africa, is a group of five major emerging and developing economies. In a statement released on Monday by Mr Olusola Abiola, the Director of Information in the Office of the Vice President, it was stated that the VP would be joining other business and political leaders across the world at the summit scheduled for the Sandton Convention Centre,

More Stories

Lagos Makes French Compulsory To Students

By Dipo Olowookere **Sets Date For Placement Test Re-sit The Lagos State Examinations Board has announced Saturday, October 22, 2016 as examination date for the year 2016 Placement Test re-sit examination for all affected primary six pupils in both public and private schools at designated centres in the state. A statement issued by the Director of the Board, Mr Oluwafemi Hassan disclosed that the re-sit became necessary to afford more pupils the opportunity to partake in the examination for admission into Lagos State public secondary schools. Mr Hassan therefore enjoined all affected schools to avail themselves of this opportunity as


Jubilation as EcobankPay Zone Berths in Ikorodu

As part of plans to create ease of payment and boost economic activities in major market clusters across the country, Ecobank Nigeria has taken its innovative digital payment solution, EcobankPay to the ancient town of Ikorodu, a Lagos suburb. This, the bank said is in its plan to create ease of payment and boost economic activities in major market clusters across the country. The bank designated the popular Bale market, Ikorodu as an EcobankPay zone Speaking at the launch, Executive Director, Commercial Banking, Carol Oyedeji restated the determination of the bank to ensure Nigerians get quality banking transactions and good


Lagos Opens CodeLagos Centre at Isolo

By Dipo Olowookere The Lagos State announced the opening of ‘CodeLagos’ and ‘Eko Nke Koo’ centre at the Isolo Public Library. Governor Akinwunmi Ambode made the announcement at the official commissioning of the newly renovated Library by Zenith Bank Plc under the Project 350 (Adopt a Library) initiative of the State Government, which is a long-term strategy to ensure Lagos State Libraries were equipped with facilities of the 21st Century through a partnership with the Private Sectors. Mr Ambode, represented by the State Commissioner for Science and Technology, Mr Olufemi Odubiyi, commended the management of Zenith Bank for renovating the


Barrows Shops for Distressed Hotels in Nigeria, Others

By Adedapo Adesanya Dubai-based hotel owners and financiers, Barrows Hotel Enterprises, which provides hotel investment and advisory services for hotels in the Middle East and Africa, has indicated its interest to acquire distressed hotels in Nigeria and other West African countries and transform them into successful hospitality brands. Barrows is focusing on hotel companies with an immediate need for liquidity and well-functioning management. In a statement on Monday, the firm said that the goal is to buy 50 distressed hotels with a total of 7,500 rooms and bring them together under the name Barrows Hospitality and Leisure Group. According to


Dangote Vows to Invest in FG’s N100b Sukuk

By Modupe Gbadeyanka Africa’s richest man, Mr Aliko Dangote, has thrown his full weight behind the debut N100 billion Sukuk exercise embarked upon by the Debt Management Office (DMO) on behalf of the Nigerian government. Mr Dangote, speaking when the Director-General of the debt office, Ms Patience Oniha, paid him a courtesy visit in Lagos, said the exercise was commendable. “I want to urge Nigerians to invest in the offer as it is high yielding with 16.47 percent. It is tax free and will be beneficial to all who invest, it will enhance infrastructural growth. “I encourage each and every


VIDEO: Cops Brutally Beat Customer Threatening to Close First Bank Account

By Modupe Gbadeyanka A video circulating on social media is presently causing outrage from Nigeria. The motion picture shows a man being allegedly assaulted by some policemen and security guards attached to a branch of First Bank in Lagos. It was said the unfortunate incident happened a branch of First Bank at Osapa in the Lekki area of Lagos State on Wednesday. According to multiple reports, trouble started when the victim, who was seen in the video being brutally hit by the cops, got involved in a heated argument with another bank customer. He was reportedly asked to leave the


Manufacturers, Entrepreneurs and Business Owners: Dealing with Inflation, Competitors and Substitute Goods

By Timi Olubiyi, PhD The Coronavirus (COVID-19) pandemic, as well as the economic turbulence, have had significant impacts on businesses, manufacturers and households, including individual lifestyles and well-being in recent times. The direct consequence of these impacts has been a very large increase in inflation numbers in the country, and it is currently having serious implications. Globally, no country is immune to inflation. Around the world, inflationary pressure has been experienced in the USA, the UK, and many other developed and developing nations. But in Nigeria, the peculiarity is that inflation has been getting higher steadily for the last two


Naira Redesign: EFCC Begs BDCs, Bankers for Info on Illicit Deposits

By Modupe Gbadeyanka The Association of Bureaux De Change Operators of Nigeria (ABCON) and the Association of Chief Compliance Officers of Banks in Nigeria (ACCOBIN) have been urged to provide prompt information on illicit deposits as the Central Bank of Nigeria (CBN) tries to control the volume of cash in the financial system. Last Wednesday, the CBN Governor, Mr Godwin Emefiele, said the bank would redesign the higher banknotes; N200, N500, and N1,000 to curb the red-hot inflation and counterfeiting. He said from December 15, 2022, the new notes would be introduced and by January 31, 2023, the old note

Recent Stories

FG, States, Local Councils Get N1.1tn As September Allocation

By Adedapo Adesanya The Federation Account Allocation Committee (FAAC) has shared a total of N1.1 trillion from the revenue generated by the nation in August 2023 for September to enable the three tiers of government; the federal government, states, and local government councils, to have funds to pay salaries and others. The allocation of the funds was confirmed by the Office of the Accountant General of the Federation on Friday following FAAC’s September 2023 meeting. According to a statement by the OAGF’s Director of Press and Public Relations, Mr Bawa Mokwa, there was “N1100.101 billion (N1.1 trillion) total distributable revenue.”


Erisco Product Reviewer Fights Back, Threatens 500m Suit

By Bliss Okperan A lady who reviewed a product of Erisco Foods Limited, Nagiko Tomato Mix, Mrs Chioma Egodi, has threatened to demand the sum of N500 million from the chief executive of the company, Mr Eric Umeofia, for violating her fundamental human rights. Mrs Egodi said she purchased the product at the market with the intention of using it to cook stew for her family. However, when she tasted it, according to her, it tasted too much sugar, prompting her to post about it on Facebook. It was reported that Erisco was not happy with the negative review. She


Scoring Success: How Data Analytics Revolutionizes Football Predictions Strategies

Data analytics is transforming football predictions as tools and techniques are consistently being designed to enhance accuracy and precision in football betting. In this article, we uncover the huge impact of data analytics in football betting. The Power of Data in Football Predictions In football betting, data analytics is used to collect, analyse, and interpret data to make informed predictions. This includes several metrics, such as player stats, team performance, head-to-head results, and external factors like injuries, fatigue, and weather conditions. Data analytics in football predictions is useful in the following ways:  Transforming Raw Data to Useful Piece of Information


Alleged Assault: Manchester United Recall Anthony to Squad

By Dipo Olowookere Brazilian winger, Anthony, is now eligible to make the Manchester United squad again, a statement from the football club has disclosed. A few weeks ago, the footballer was suspended by the English sports outfit over allegations of assault in his home country. His former girlfriend, Rosilene Silva, accused the footballer of assaulting her, prompting the police in Brazil to launch an investigation into the claims. The police in the United Kingdom also took an interest in the matter, forcing the Old Trafford team to ask Anthony to stay away from the team. In an update on Friday,


How to Find The Best Marine Insurance Provider For You

For maritime businesses, the stakes are high, and the seas can be unpredictable. Whether you own a shipping fleet, operate a fishing company, or oversee marine logistics, safeguarding your assets with the right marine insurance is prudent. It’s also essential for the sustainability of your enterprise. Here are some tips for how to find the best marine insurance provider. By following these strategic steps, you can ensure your business remains afloat, even in the face of unforeseen challenges. 1. Assess Your Maritime Needs The first crucial step towards securing the ideal marine insurance provider is a comprehensive assessment of your


Abdullahi Atewe, Emmanuel Dairo to Relaunch Future Brand Idol

By Adedapo Adesanya After a two-year hiatus, the prestigious Future Brand Idol (FBI), an advertising contest, is making a return on a bigger scale following a new partnership with Forbes Black Member community member, Mr Emmanuel Dairo. The competition, which seeks to discover and breed young creative talents in Nigerian tertiary institutions, has created top talents who have gone to explore new grounds in their respective endeavours. Through this newly forged relationship, the founder of the contest, Mr Abdullahi Ahmed Atewe, and Mr Dairo will be seeking to expand the horizon of the challenge to offer more value. This will


Oyedele Clarifies Transfer of Funds for Tax Reform Committee

By Adedapo Adesanya The Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Mr Taiwo Oyedele, has cleared the air regarding recent reports on the transfer of funds to the Joint Tax Board (JTB) by the Federal Inland Revenue Service (FIRS) under the erstwhile chairman, Mr Muhammad Nami, for the tax reform committee. In a statement on Friday, he revealed that N5 billion was paid to the board to fund activities of the team set up by President Bola Tinubu, noting that “The committee’s budget includes provisions for a national Data for Tax project which the JTB had been


Lagos Shuts Down Alaba Market

By Bliss Okperan The Lagos State Waste Management Authority (LAWMA) has announced the immediate closure of the popular spare parts market, Ladipo Market, over an “unhygienic environment.” In a statement on Friday, the waste management agency said it shut down the market due to the unwholesome environmental practices by traders who refused to pay for waste services alongside the poor waste management. The Commissioner for Environment and Water Resources in Lagos, Mr Tokunbo Wahab, said the market would remain closed until the mandatory conditions of redress have been met by traders and market stakeholders. “It is imperative that markets in


Delisting: Capital Hotels Opens Escrow Account to Pay Off Minority Investors

By Dipo Olowookere The board of Capital Hotels Plc has announced the creation of an escrow account for the payment of about N1.6 billion to minority shareholders of the company. The hospitality firm is leaving the Nigerian Exchange (NGX) Limited after years on the nation’s main stock exchange. In a notice signed by Alex Ugwuanyi, the organisation said the account was created with CardinalStone Registrars Limited and has been sufficiently funded for payment “to shareholders” who “have accepted to exit” the firm by selling their holdings. Recall that in March 2023, shareholders of Capital Hotels approved the request of the


VFD Group Quits NASD OTC Securities Exchange After Delisting

By Adedapo Adesanya VFD Group Plc has been officially delisted from the NASD Over-the-Counter (OTC) Securities Exchange months after the proprietary investment company revealed its intention to list its stocks on the Nigerian Exchange (NGX) Limited. The bourse on Thursday confirmed the development in a notice seen by Business Post. “Pursuant to the company’s request to delist from the NASD OTC Exchange, we wish to inform you that VFD Group PLC shares will be delisted with effect from the close of business (COB) today, Thursday, September 28, 2023,” the notice read. Last Friday, after three years of trading on the