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Mozambique’s Gas Among Alternatives for European Union

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Mozambique's Gas

By Kestér Kenn Klomegâh

Mozambique is increasingly stepping up efforts in the production of liquefied natural gas and consequently becoming one of the suitable reliable suppliers to Europe. While it might not replace Russia which cuts its export of gas as a reciprocal action against European Union members, Mozambique seeks ultimately to earn some revenue from its natural resources.

Mozambique’s state-owned National Hydrocarbons Company (ENH) has acknowledged the chances of helping to address growing gas needs in Europe, due to uncertainty over Russian supplies following the invasion of the former Soviet republic of Ukraine.

“With the situation of the war in Ukraine, the European market has increased demand for gas. One of the ways to speed up our gas to reach the markets is to use a second floating platform similar to the one that is already here in Mozambique,” said ENH’s Executive Commercial Director, Pascoal Mocumbi Júnior, quoted by Mozambique’s Information Agency (AIM).

Mocumbi Júnior explained that a second floating liquefied natural gas production platform would join an identical infrastructure that already exists in Mozambican waters if the country were to be part of the solution to the energy deficit caused by the Russia-Ukraine crisis.

The construction time for a possible second floating unit would be three years, two years less than the time it took to build the unit that has already started loading hydrocarbons, as a way to gain time and speed up gas production.

“With the amount of gas existing in Mozambique, automatically positions itself as an alternative to supply the need that currently exists and the faster the country can get its gas on the market, the greater the possibility of taking advantage of the current crisis caused by the Russia-Ukraine conflict,” he stressed.

In late July, the outgoing European Union (EU) Ambassador to Mozambique argued that natural gas from Cabo Delgado was among the alternatives in Europe’s plan to diversify energy sources in the face of constraints caused by Russia’s invasion of Ukraine.

“Mozambique’s gas, with the presence of large European multinational companies, now has an even more important and strategic value,” Sánchez-Benedito Gaspar said in an interview with Lusa, Mozambican News Agency, in Maputo.

According to the diplomat, with Russia’s invasion of Ukraine, Europe came to the conclusion that “it cannot trust its old partner [Russia, among the world’s biggest gas exporters], which is authoritarian and uses gas as an instrument of war,” and is making efforts to secure alternative sources.

“We have adopted a new strategy in Europe, called RePower EU, which has several elements […] With regard to gas, which is considered a transitional energy, we are looking for alternative suppliers […] Mozambique is among the alternatives,” Sánchez-Benedito Gaspar stressed. The Spanish diplomat (EU Representative) ended his mission in Mozambique in July and was replaced by the Italian Ambassador Antonino Maggiore.

According to Noticias, an information portal, the government is creating the necessary conditions for a resumption of the TotalEnergies-led Mozambique LNG project, a verification team is already working in Cabo Delgado.

Minister of Mineral Resources and Energy, Carlos Zacarias, explained that the government wanted to see operations resume as soon as possible. “The security situation in the area where the TotalEnergies and ExxonMobil projects will be implemented has, in our view, improved a lot. Naturally, before resuming activities, there will be a lot of scrutiny on the part of the companies carrying out the investments,” Minister Zacarias said.

Carlos Zacarias said although the government considered the conditions for the resumption of the project were improving, it was up to the company to verify if, from its point of view, the environment to recommence activities was in place. The restoration of security in the district of Palma has permitted the return of some of the residents and the resumption of some economic activities.

According to Minister Zacarias, in the same way, that the population was gradually returning following the improvement of security conditions, economic enterprises could also do so. That it was not just the TotaEnergies project that had been suspended, but also many others such as the roads under construction in various locations.

In April last year, the multinational Total announced the withdrawal of all personnel from its LNG project in Afungi. 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.

Total E&P Mozambique Area 1 Limited, a wholly-owned subsidiary of Total SE, operates the Mozambique LNG project, with a 26.5% equity interest, together with ENH Rovuma Area 1, S.A. (15%), Mitsui E&P Mozambique Area 1 Limited (20%), ONGC Videsh Rovuma Limited (10%), Beas Rovuma Energy Mozambique Limited (10%), BPRL Ventures Mozambique B.V. (10%), and PTTEP Mozambique Area 1 Limited (8.5%).

In order to achieve the task of exporting to Europe, Mozambique’s National Petroleum Institute (INP) intends to maximize the use of Mozambican labour in gas extraction projects in Mozambique, generating 14,000 possible jobs in the four major projects underway.

Director of Local Content at the INP, Natália Camba, clearly pointed to the latest projects including Mozambique LNG and Rovuma LNG, which are both onshore gas liquefaction projects in the northern province of Cabo Delgado, the Coral Sul floating LNG platform, anchored some 40 kilometres off the Cabo Delgado coast, and the Inhassoro-Temane project in the southern province of Inhambane.

The Mozambique LNG project involves gas liquefaction plants on the Afungi Peninsula, in the Palma district. But it is currently interrupted and there is no firm date for the resumption of activities, due to the attacks by Islamist terrorists. But once the security issues are solved, the project should create 5,000 jobs for Mozambicans in the construction phase and 1,200 in the operational phase, with a plan to train 2,500 technicians.

In the case of the projects already underway, namely Coral Sul FLNG and Inhassoro-Temane, they have jointly made available 3,820 jobs in the construction phase alone, with a forecast of around 486 fixed jobs in the production phase, including foreign labour that will be reduced in the subsequent phases.

“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,” she said, and it is expected that 88 per cent of those recruited would work in construction.

With its strategy to meet the demand for skilled labour for the extractive industry projects in the country, according to the director, the INP intends to develop a framework of skilled human resources to meet the demands of the market, as well as to combat the discrepancy between the investments made in the industry and its capacity to generate employment.

In the framework of Local Content, the INP’s actions with the companies operating the gas projects envisage the qualification, training and certification of about 200 Small and Medium Enterprises operating to internationally required standards.

The armed insurgency that began in 2017 in Cabo Delgado province, and the entry of foreign troops to support Mozambican forces in the middle of last year have improved the security situation, recovering important positions such as the village of Mocímboa da Praia. 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.

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Australia Begins Process to Introduce Central Bank Digital Currency

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australia central bank digital currency

By Adedapo Adesanya

As more countries gravitate towards a digital currency, Australia joined the cadre as it announced the beginning of a collaborative effort to review the case for a central bank digital currency (CBDC) in the country.

The Reserve Bank of Australia (RBA), Treasury, and other agencies will oversee the research effort designed to explore the potential economic benefits of introducing such a currency in Australia, the RBA said in a statement Tuesday. The project is expected to run for about a year.

Speaking on this, the RBA’s Deputy Governor Michele Bullock said the work “is an important next step in our research on CBDC. We are looking forward to engaging with a wide range of industry participants to better understand the potential benefits a CBDC could bring to Australia.”

The central bank reiterated the research comes in the context of Australia already having “relatively modern and well-functioning payment and settlement systems.”

The RBA is collaborating with the Digital Finance Cooperative Research Centre in the project, while Treasury is participating as a member of the steering committee. The work will involve the development of a “limited-scale pilot that will operate in a ringfenced environment for a period of time.”

Over the course of the next 12 months, interested industry participants will be invited to develop specific use cases that demonstrate how the digital currency could be used to provide innovative and value-added payment and settlement services to households and businesses, the RBA added.

A report on the findings, including an assessment of the various use cases developed, will be published at the conclusion.

Central banks worldwide are acting swiftly to ensure they don’t fall behind as money edges toward its biggest reinvention in centuries with alternative concepts like cryptocurrencies taking hold.

Nigeria is one of the countries at the forefront of a CBDC with the introduction of the eNaira in 2021 with the Digital Euro still under investigation phase while Jamaica began its own testing phase in May. China’s Digital Yuan has been in testing since 2020.

Blockchain technology, as well as events like the coronavirus pandemic, are among the forces pushing consumers to go cashless.

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Mozambique Risks Economic Stability Over Russian Oil

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Mozambique Risks Economic Stability

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.

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ECOWAS Creates Committee as Nigeria Cries Foul Over Recruitment

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ECOWAS Court

By Adedapo Adesanya

The Economic Community of West African States (ECOWAS) Parliament has appointed an independent ad-hoc committee to investigate allegations of recruitment malpractice at the parliament.

This is as it also directed the suspension of the ongoing recruitment exercises, pending the outcome of the investigation by the independent panel.

Nigeria had raised worry earlier and even threatened to withdraw its membership of ECOWAS if the regional body does not suspend the ongoing recruitment exercise as recently directed in the 2022 First Ordinary Session of the ECOWAS Parliament in Abuja.

Nigerian representatives at the parliament had issued the threat when some principal officers in the regional bloc defiled the directives and embarked on the alleged illegal recruitment of their relatives and cronies.

Speaker of the ECOWAS Parliament, Mr Sidie Mohamed Tunis in a statement said having received written complaints from the 1st Deputy Speaker, Honourable Ahmed Idris Wase, and the Permanent Representative of Nigeria to the ECOWAS Commission, Ambassador Musa Sani Nuhu, concerning the ongoing recruitment exercise at the ECOWAS Parliament, had appointed an Independent Adhoc Committee to investigate allegations of marginalization and malpractice against Nigerian candidates in the ongoing recruitment process.

The action of the Speaker is in conformity to Rule thirty-three (33) and thirty-four (34) of the Rules of Procedures of the Parliament which provides that a Special Committee may be set up to address specific matters.

The Speaker, in response to pressing emergencies, can set up an Adhoc committee, in consultation with the Bureau, and inform Parliament at its next session.

The ad-hoc committee would be headed by Senator Mohammed Ali Ndume, the Chairman of the Committee on Administration, Finance, and Budget.

Other Members of the Committee include Lynda Chuba Ikpeazu – Nigeria; Fatoumatta Njai – The Gambia; Amadou Djibo Ali – Niger; Kounon Nahou Agbandao -Togo.

Others are, Caramo Camara -Guinea Bissau; Moussokora Chantal Fanny – Cote d’ Ivoire and Mr Arboncana Oumarou Dicko – Clerk to the Committee.

The terms of Reference of the team are Investigate allegations of inappropriate conduct in the ongoing recruitment process at the ECOWAS Parliament; Investigate allegations of marginalization of Nigerian Candidates in the current recruitment process; Investigate and determine if indeed the plenary adopted any Resolution concerning the subject matter (Recruitment of Staff), using normal parliamentary procedure.

It was disclosed that “In the execution of its mandate, the Committee shall be granted access to all documents relating to the recruitment exercise and work with the Advisory Committee on Recruitment and Promotions at the ECOWAS Parliament, to under-study and review the exercise. The Adhoc Committee would be guided by the provisions of the Supplementary Act and the ECOWAS Staff Regulations.

“The work of the ad-hoc Committee is expected to commence on 22nd August 2022 and its findings are expected to be reported to the Speaker in one week, following which a Bureau meeting will be convened to consider the report for onward submission to the Plenary.

“The ECOWAS Parliament, under the leadership of Right Honourable Dr Sidie Mohamed Tunis, affirms its stern commitment to fair labour practices and is devoted to upholding and protecting the rights of all Citizens of the Community to aspire for positions in any Community Institution, in line with the provisions of the ECOWAS Staff Regulations and all related Protocols.”

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