Rising gas demand in the EU countries, which have been imposing sanctions on their main provider, Russia, on the back of the Ukraine war, has ... prompted Egypt on the other side of the Mediterranean to boost its LNG exports. Yet, its high domestic consumption and possibly insufficient infrastructure remain stumbling blocks.
Police forces from both Tanzania and Mozambique have agreed to conduct joint operations against terrorist groups at their shared border following an attack in October in which more than 20 locals in a Tanzanian village were beheaded.
The cooperation is a sign that Mozambique “will have the help that it needs,” says Alessandro Nanotti, a former project manager at the Rovuma LNG project for Italy’s Eni. “It’s happening already.” Delays to the start of production at Rovuma, scheduled for 2024, are now likely to be limited to those caused by COVID-19, he says. “It does improve the prospects.”
Mozambique needs to ask for joint intervention, but has so far failed to do so as it wants to show it’s in full control, says Nanotti. It has mostly relied on private military contractors from countries such as Russia and Zimbabwe. Yet neither Mozambique’s army, which is unequipped for modern war, nor the contractors are capable of ending the insurgency. “Mozambique can’t rely on itself any more.”
It’s only when the death toll started reaching tragic figures that the insurgency moved up the international agenda. The beheading of more than 50 people in the Muatide village of northern Mozambique led French President Emmanuel Macron to call for an international response to the insurgency.
- Pressure for a coordinated response has been growing from international corporates and government bodies including export credit agencies, says Nanotti.
- “The trigger is when the insurgency threatens major oil company investments. When there is enough push, things will move very fast.” Countries such as India, Russia and the US “will be pushing the Mozambique government to take action.”
South Africa Interests
French oil major Total in July secured about $15bn in project financing for LNG development in Mozambique. Louw Nel, an analyst with NKC African Economics in Cape Town, estimates that Rand Merchant Bank, Nedbank, Standard Bank, Absa, the Development Bank of Southern Africa and the Export Credit Insurance Corporation of South Africa have a combined $900m invested in Mozambique’s LNG projects.
The South African National Defence Force (SANDF) has naval and air assets that could be utilised to good effect in Cabo Delgado, Nel writes.
- “Budget constraints remain the biggest obstacle”, he adds. The SANDF is “significantly underfunded” and it’s hard to see that being pumped up given the state of South Africa’s public finances.
- Zimbabwe which imports electricity from Mozambique, also needs an end to the conflict, says Nanotti.
- “Many of these countries didn’t want to be involved,” he adds. They are not natural allies and also compete for resources: a delay in Mozambique’s LNG production would be good for Tanzania’s own LNG projects, he adds.
Nanotti traces the roots of the insurgency which began in 2017 to the successive expulsions of Islamic State (IS) fighters from Kenya and Tanzania. The IS units ended up in northern Mozambique because they didn’t have anywhere else to go.
Once there, they joined forces with a local youth movement that was disenchanted by the lack of local jobs, he says. Though northern Mozambique is predominantly Muslim, this local movement was not a radical Islamic one, he adds. “It was not about religion. Radical Islam was a way to identify themselves” from 2017.
Supporting the Mozambique government won’t be straightforward. Northern Mozambique is a difficult region to access and better infrastructure is needed to get there, Nanotti says. Even drones would struggle to detect insurgents operating from forest areas, he adds.
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The prospects of a global energy transition towards renewable sources means that the window of opportunity to develop new LNG projects is closing, Nanotti argues. Liquefaction of natural gas entails 8% to 9% of the gas being emitted, meaning that cleaner alternatives will have priority for new development, he says. The next few years are the “last chance” for Mozambique to produce LNG. “You have to do it now.”
The dangers of failing to support Mozambique against the insurgents outweigh the costs.
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