In what seemed like the blink of an eye, Mozambique’s known natural gas reserves spiked from nearly nothing to over 165 tcf, placing it as the continent’s third biggest reserve holder
It has been almost exactly ten years since Anadarko drilled the well that would give Mozambique its first major gas find in over sixty years of mostly disappointing oil and gas exploration. Many wells followed that first offshore discovery in block 1 and further in ENI-operated block 4.
In what seemed like the blink of an eye, Mozambique’s known natural gas reserves spiked from nearly nothing to over 165 tcf, placing it as the continent’s third biggest reserve holder.
Just like that, one of Africa’s poorest countries was about to become one of the world’s biggest energy players. Well, not really just like that. In 2010, Mozambique had no know-how in oil and gas, no negotiation capabilities, understanding of the sector, no appropriate legal framework in place, nor human or financial capital to take advantage of this momentous thing that had just happened. A country that at the time could offer access to electricity to only 18% of its citizens, was suddenly endowed with enough natural gas to power half of Europe for a couple of decades and more.
Since then, much water has passed under the bridge and ink over paper. Presidents, ministers and corporate leaders have been replaced, licenses have changed hands, projects have been proposed, declined or approved, and now, more than ever, the promise of wealth seems close, but is it? Afterall, we are ten years in and no natural gas is flowing, no LNG is being produced or sold, and while a bit better off, at 27% of electricity penetration, most of the country is still in the dark. But that should not fool us, Mozambican leaders have learned much and more over the last decade, and despite some challenges, the country seems ready to take on a new stage of wealth and growth.
It was that learning curve that taught these leaders to seek out international expertise to support resource management training and legal framework development. On the one hand, the national oil company hired Wood Mackenzie to help it prepare for the responsibility to manage and sell its corresponding portion of the resources, which has resulted in the forming of a consortium with international oil and gas trader Vitol, in September last year. On the other, the government sought the support of more experienced energy producers and international partners, including the IMF or the World Bank. Just this month, Mozambique's President Filipe Nyusi met with Norway's Crown Prince Haakon and signed an agreement for support on natural gas resource management.
It was this concerted capacity growth that culminated in the new Petroleum Law of 2014 and on the successful bidding round for exploration blocks that took place the same year, a move that took advantage of the enormous attention the country’s acreage was receiving.
This self-actualization process combined with close, albeit sometimes slow, negotiations with the international oil companies that are leading these development efforts have resulted in final investment decisions worth dozens of billions of dollars for the development of liquefied natural gas plants in Mozambique.
Enormous Economic Opportunity
As it stands, Total's 12.9mn t/yr Mozambique LNG project (which it took over from Anadarko) is expected to enter production in 2024. The latest news indicates that ENI’s 3.4mn t/yr Coral South FLNG project is on schedule to come online in 2022. And just last week, the Mozambican Ministry of Mineral Resources and Energy said it expected FID from the ExxonMobil-led 15.2mn t/yr Rovuma LNG scheme by June 2020. The project is expected to start operating by 2025.
The implications of this are tremendous. Just in foreign direct investment, Total’s USD$25 billion investment in the LNG plant amounts to more than two times Mozambique’s current GDP. Not to mention the trickle-down effect on job creation, supply and associated services industries, etc, and that’s just one of the projects to be developed in an area that is far from properly explored. Together, the three projects are estimated to bring up to USD$54 billion in investment over the next few years.
Further, taking into account the relatively low domestic needs for natural gas in Mozambique, these three projects alone could place the country among the five biggest LNG exporters in the world, up there with Qatar, Australia, Malaysia and the United States.
However, if the domestic needs are small now, they are expected to quickly rise. The government has wisely negotiated for part of the production to be diverted to the domestic market, which can be used for power generation, to feed a gas-based industry of fertilizers and petrochemicals, to fuel homes or even to export via pipeline to neighbouring countries.
Already, the government has secured multilateral financing for a 400MW gas-fired power plant and transmission line to the capital Maputo, which will draw on national gas production and will dramatically contribute to improve power reliability in the capital.
To help accelerate the industry’s development, Mozambican officials were at the Subsea Expo in Aberdeen to showcase the country’s opportunities to North Sea companies. The aim is to secure a well-established supply chain that will support a streamlined development of the industry, as well as bring expertise into the country and promote the development of indigenous companies and workforce.
All these developments are making investors excited and analysts optimistic. Rating agency Fitch forecasts that natural gas production in Mozambique will climb 26.5% per year in the run up to 2029 and that will fuel an average 12.4% GDP growth per year throughout the decade.
These are fantastic news for a country that has suffered so dramatically with the combined effect of the Idai and Kenneth cyclones last year, which affected much of the economic activity and stranded GDP growth in 2019 at 1.9%. Already, the African development Bank sees a rebound in 2020, forecasting a 5.8% growth for 2020.
And that is another reason the development of Mozambique’s natural gas resources will be paramount for the future of the country. It will allow for the development of a more diversified and resilient economy, that will be less subject to external shocks.
The landscape is so momentous for Mozambique at this point in time, that it is of paramount importance to get things right. We have had too many African stories of grand plans gone wrong and we do not need another one. The future of the country is at stake and that of its people.
So far, Mozambican leaders have shown resolve to push forward suitable policies and facilitate the industry’s development, but good governance and civil society participation have been shown again and again to be fundamental pillars of successful resource management.
Already, the country battles violence in its northern region, in the site where one of the LNG plants is to be developed. Armed insurgents, allegedly with an extremist religious agenda, have been attacking small villages in the region and foreign workers. The operating companies have requested the government to send in the army to help control the situation. Some reports indicate that some of these insurgents come from extremely poor backgrounds and have been radicalized based on the idea that the oil and gas companies are there to steal their resources and that no one will benefit. Here is where the need to integrate the population comes into play, not just through local content policies and by creating employment opportunities for them, but also by educating them about what is being developed, what to expect and how that will affect and benefit them.
This needs to be combined with strict transparency and resource management policies, upheld by institutions with the authority to implement regulation. This month, the Mozambican Centre for Public Integrity indicated that the country could have lost a considerable amount of money simply for failing to certify the real costs of natural gas projects declared by the companies in the period prior to 2015.
These events hurt the public image of the industry and spur social unrest at a time when the country should be focusing on maximizing the positive effects of this sector for the economy and ensuring that every Mozambican stands to gain from the country’s wealth.
Allies like Russia and the US have offered to help with the security situation. Others have offered cooperation in resource management, and their support should be welcomed but, it is on the shoulders of Mozambican leaders that the responsibility of a lifetime falls to make the best decisions for the future of their country and their people. They cannot let them down.
NJ Ayuk is Executive Chairman of the African Energy Chamber, CEO of pan-African corporate law conglomerate Centurion Law Group, and the author of several books about the oil and gas industry in Africa, including Billions at Play: The Future of African Energy and Doing Deals.
A major international airline, Emirates, on Tuesday, asked staff to take unpaid leave for up to a month at a time due to the rapidly spreading coronavirus that has led to flight cancellations around the world.
Emirates have so far cancelled flights to Iran, Bahrain and to most of China because of the virus, and countries around the world have placed strict restrictions on the entry of foreigners.
According to its Chief Operating Officer, Adel al-Redha, the airline has more resources than it needs as a result of cutting frequencies or cancelling flights to some destinations.
“Considering the availability of additional resources and the fact that many employees want to utilise their leave, we have provided our employees with the option to apply for voluntary unpaid leave up to one month at a time,’’ he said.
Emirates Group, the state-owned holding company that counts the airline among its assets, has asked staff to consider taking paid and unpaid leave as it seeks to manage a measurable slowdown in its business.
The group had more than 100,000 employees, including more than 21,000 cabin crew and 4,000 pilots, at the end of March 2019, the end of its last financial year.
Major concerts and events in the UAE, an air transit centre, including tourism and business hub Dubai, have been cancelled or postponed as the coronavirus spreads in the Gulf.
Earlier, the airline industry’s largest global body IATA urged Middle Eastern Governments to provide support to airlines as they try to manage the impact of the outbreak.
The Federal Inland Revenue Service (FIRS) said it would rake in four trillion naira as tax revenue from the extractive sector of the Nigerian economy in the 2020 fiscal year.
The FIRS made this known in a statement issued by Abdullahi Ahmad, Director, Communications and Liaison Department in the service in Abuja on Tuesday.
The statement said the Executive Chairman, FIRS, Mr Muhammad Nami, disclosed this when a team of the Nigerian office of the Organisation for Economic Cooperation and Development (OECD) paid him a courtesy visit.
Nami solicited the support of the OECD in stemming the tax evasion scheme of oil majors and multinationals operating in Nigeria through the illegal act of transfer pricing under which these foreign companies dodged tax and transfer their profit offshore.
The FIRS boss underscored the need for capacity-building, information sharing, data interpretation, usage and related technical synergy with the OECD in order to meet tax revenue targets in the extractive industry and the newly emergent Digital Economy.
He observed that revolution in Information and Communication Technology (ICT) had made physical filing of tax returns obsolete.
Nami, however, stated that ICT had also made tax collection more complex, especially in trans-border trade and trans-continental commerce.
According to him, in such trade big players like Amazon, Google, facebook, Alibaba and other e-commerce corporations do big business around, drive the digital economy and yet countries find it difficult to take due tax from the huge economic activities these online giants engage in.
“This is more so for developing countries like Nigeria where our people buy luxury goods more and more online while these big online stores don’t pay any tax to us.
“The complexity of the digital economy to the tax authorities also extents to the telecommunication and financial sectors, including the emerging trades and the exchange carried out using digital currency,” he said.
Similarly, Nami when he received the Comptroller-General (CG), Federal Fire Service, Dr Liman Alhaji Ibrahim, commended the service for its prompt response during a fire incident that occurred at its building in 2019.
He called for more synergy and collaboration between the FIRS and the Fire Service.
What this means is that instead of delegates converging physically in Washington, they would now link up from their various locations through video, audio and text channels.
The announcement came in a joint statement signed by President of the World Bank Group, Mr David Malpass, and the Managing Director of IMF, Mrs Kristalina Georgieva.
Malpass and Georgieva hinged the decision on concerns about the fast-spreading Coronavirus (COVID-19) and the “human tragedy surrounding it’’.
Held at the World Bank and IMF headquarters in the U.S capital, the spring meetings usually brought together government officials, business leaders, representatives civil society, journalists and observers from around the world.
“Given growing health concerns related to the virus, the management of the IMF and world bank group and their Executive Boards have agreed to implement a joint plan to adapt the 2020 IMF-World Bank spring meetings to a virtual format.
“ Our goal is to serve our membership effectively, while ensuring the health and safety of spring meetings participants and staff.
“We remain fully committed to maintaining a productive dialogue with our stakeholders and will leverage our IT-related and virtual connection capabilities to the fullest, to hold our essential policy consultations with the membership.
“We will also continue to share IMF and World Bank analyses.
“With this adapted format, we are confident that our member countries will be able to effectively engage on pressing global economic issues at these spring meetings,” they said.
Consequently, registration for all categories of participants had been suspended and all previous confirmations cancelled, the IMF said in a mail to intending participants.
“Official delegates who will participate in the official sessions will receive further instructions from the Secretary and from the office of their Executive Director of the respective institutions,’’ it added.
The violent conflict that erupted in the North West and South West regions of Cameroon in 2016 continues unabated. It was triggered by the government’s repression of protests over the increasing influence of French in the English-speaking legal and educational institutions, and by the perceived marginalisation of the country’s Anglophone regions.
Some Anglophones are demanding increased decentralisation, while others are violently struggling for an independent state called “Ambazonia”.
The conflict has had devastating consequences for the Anglophone regions. According to Crisis Group around 3,000 people have died and half a million have been displaced. One in three people in the Anglophone regions are estimated to be in need of humanitarian aid.
Attempts have been made, including the involvement of other countries, to resolve the crisis. For example, Switzerland led a mediation initiative in 2019. But, for its part, the African Union, has been largely silent on the conflict.
It supported the Swiss-led initiative. It was also party to a joint statement on a tripartite commitment to supporting Cameroon’s ongoing peace and reconciliation process. And the African Union head, Moussa Faki Mahamat, visited Cameroonian President Paul Biya in July 2018 and discussed the need for a national dialogue to resolve the conflict. He visited again in November 2019.
But the conflict is conspicuously absent from the African Union’s Peace and Security Council, its decision-making body on the “prevention, management and resolution of conflicts”. This, despite the council being mandated to “facilitate timely and efficient response to conflict and crisis situations in Africa”.
The reason for this, we believe, is that a major part of the struggle in Cameroon is separatist in character. Cameroon’s territorial integrity is therefore at stake. In 1963, the Organisation of African Unity, predecessor to the African Union, adopted the principle of the inviolability of borders inherited from colonisation.
Since then there has been little support for secessionist movements in Africa. Eritrea and South Sudan were able to become independent states and many African countries support Western Sahara’s quest for self-determination. But a host of others – including Biafra, Katanga, Bioko, Zanzibar, Darfur, Casamance, Somaliland – have not seen much support.
Many of Cameroon’s neighbours, and a few on the Peace and Security Council, face similar challenges and are, therefore, not sympathetic to this cause. Indeed the African Union chairperson, during his visit to President Biya in 2018 had reconfirmed the African Union’s “unwavering commitment to the unity and territorial integrity of Cameroon”.
But the African Union is vital to finding a sustainable solution to the conflict in Cameroon. It needs to overcome this difficulty, and step up its lacklustre conflict management response.
Who should be doing what
The United Nations (UN) is tasked with the responsibility of preventing and managing conflict globally. In 2017, it and African Union signed a joint “framework for enhanced partnership in peace and security”. It emphasised collaboration and predictability in dealing with conflict in Africa.
Regional organisations are tasked, where appropriate, to respond to conflicts in their respective regions. There are many positives about this division of labour. But, there can also be challenges when there is a lack of capacity or unwillingness to respond to conflicts.
The UN Security Council attempted to discuss Cameroon in May 2019, but had to be content with an informal discussion after African members blocked a formal tabling of the matter.
For its part, the African Union has established a robust peace and security architecture. Besides the Peace and Security Council, it also has the
African Standby Force, for peace enforcement and peacekeeping;
Panel of the Wise, for preventative diplomacy;
Continental Early Warning System, which monitors, analyses and provides warnings of impending conflict situations in Africa; and
Africa Peace Fund, established in 1993 to be the main funder of peace and security activities.
The African Union also has a mediation unit and, more recently, established a post conflict reconstruction centre.
The African Union has used these various avenues to resolve conflicts in a number of countries. These have included the Central Africa Republic, Democratic Republic of Congo, Mali, Somalia, Gambia and Sudan.
Its track record in conflicts mixed. It did well in managing the conflict in Sudan, but not so well in Libya or South Sudan. The reasons often cited for the failures include the near absence of regional leadership, reliance on external funding, problems of harmonisation with the regional economic communities and a lack of capacity.
There is also a lack of political will on the part of the African Union’s peace and security council to get involved in a conflict deemed largely as an internal matter.
The fact that an African Union head has visited the country could point to some “quiet diplomacy” taking place in the background. But, that is not enough.
If the African Union does not become more proactive in resolving the conflict in Cameroon, it risks seeing it escalate, and possibly fuelling instability in the region.
For many years Cameroon was considered a haven of peace in Central Africa, one of the more unstable regions on the continent with conflicts in the Democratic Republic of Congo, Central African Republic, Burundi and Chad. The region does not have a single democratic state.
There are a number of different issues that need to be simultaneously addressed in the management of the conflict in Cameroon.
Firstly, the African Union and UN need to coordinate their efforts in addressing the humanitarian needs of the refugees and displaced persons. And the African Union Commission on Human and Peoples Rights must investigate the many complaints of human rights abuses in Cameroon, and to take appropriate action.
Secondly, the continental body needs to deploy its “Panel of the Wise” to determine how best to manage the conflict. Thirdly, it must also send a special envoy to the Anglophone region to implement a conflict management strategy that will lead to a sustainable peace agreement.
Fourthly, it must settle the disputes over the right to self determination through the appropriate UN structures.
Cheryl Hendricks, Executive director, Africa Institute of South Africa, Human Sciences Research Council and Gabriel Ngah Kiven, PhD candidate in Political Studies at the Department of Politics and International Relations, University of Johannesburg
Senegal’s Health Minister, Abdoulaye Diouf Sarr, said on Monday that the country has confirmed its first case of coronavirus.
The patient is a French man who lives in Senegal and flew back from France on 26 February, Mr Sarr told a press conference in the capital, Dakar.
The patient reported to a private hospital on 27 February with symptoms, including a headache.
The authorities are monitoring everyone who travelled on the same flight as well as the patient’s family.
The minister said the country was prepared to deal with the virus, pointing out that Senegal had the facilities to test for the coronavirus.
This is the second case in sub-Saharan Africa after one was confirmed in Nigeria last week, BBC reports.
Also, Tunisia confirmed its first case of the new coronavirus, the country’s health minister told journalists on Monday.
Abdelatif el-Maki said the patient was a 40-year-old Tunisian man, who arrived in the country by boat from Italy on 27 February.
He and the other passengers had been advised to monitor themselves. When his fever spiked, he contacted emergency services.
In Africa, Tunisia, Algeria, Egypt, Senrgal and Nigeria have all confirmed cases of the virus.
The Nigerian Senate President, Sen. Ahmad Ibrahim Lawan, has applauded Governor Udom Emmanuel on his approach to governance and national development, describing him as the face of the new Nigerian politician. Senator Lawan gave the commendation while speaking at the 60th birthday anniversary celebration and thanksgiving service of Senator Akon Eyakenyi, representative of Akwa Ibom South senatorial district at Destiny International Mission, Uyo, on Sunday. He described Governor Emmanuel as a very decent person, a tolerant leader and a purpose driven administrator who would work across party lines to achieve development objectives. He said the governor is one of Nigeria’s leaders to look up to as he fits into the country’s desired new political dispensation. “I want to say something about his Excellency, the Governor [Udom Emmanuel]. As a politician, he is a decent man, very decent; as a practicing politician, he is a very tolerant leader. “Here is one elected leader who believes we should all work together to deliver service to Nigerians. Your Excellency I commend you”. Senator Lawan stated that politics of the new Nigeria, which the 9th Senate stands for, is defined to a large extent, by how to reach a desired destination in service delivery, devoid of partisanship and rancour. “Governor Emmanuel represents such a new dispensation”. He said, pointing out that the large turnout of senators at the event, irrespective of party affiliations, is a testimony to the sense of comradeship among the Akwa Ibom contingent in the Senate. He thanked the people of Akwa Ibom state for sustaining the qualitative leadership. In his remarks, Governor Emmanuel thanked the Senate President for leading distinguished senators to celebrate with their colleague, Senator Akon Eyakeyin. He acknowledged the wide acceptance of the Senate leadership, headed by Dr. Ahmad Lawan and described the 9th assembly as one of the most peaceful in the history of Nigeria’s democracy.