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EU targets aid to gas-rich Mozambique, Tanzania

By Gemma La Guardia BRUSSELS (Reuters)
Posted on Thursday, 19 July 2012 13:40

European Commission President Jose Manuel Barroso and Andris Piebalgs, the European aid commissioner, will sign agreements to provide 37 million euros in financing for local economic development and public projects during the visit. But the longer-term goal is to strengthen the EU’s ties to southern Africa, a region that is among the most dynamic on the continent and could become a major provider of energy resources to Europe if Asian competitors do not move in first.

During the visit, Barroso and Piebalgs will visit Beira, a port in central Mozambique that is a critical piece of infrastructure for landlocked neighbouring states such as Zimbabwe, Zambia and Malawi that need access global markets. Mozambique, which at 7 percent has one of the fastest economic growth rates in the world, is a former Portuguese colony. Two decades ago it was one of the world’s poorest countries after a long civil war and remains in need of aid. As a former prime minister of Portugal, Barroso has an affinity with Portuguese-speaking southern Africa, where the EU is keen not to have its historical links eclipsed by new investment money from China, Brazil and elsewhere.

One of the most attractive prospects for international investors in both Mozambique and Tanzania are the offshore reserves of natural gas discovered over the past 18 months. Last month, U.S. firm Anadarko Petroleum Corp. announced a further significant find and estimates that there could be up to 60 trillion cubic feet of recoverable gas off the coast of Mozambique along. That would be enough to meet the entire gas consumption of Europe’s four biggest economies — Germany, France, Britain and Italy — for up to six years running.

Similar finds have been made off the Tanzanian coast. Many of the investors moving in to the region are European firms, including Royal Dutch Shell, Cove Energy, Italy’s ENI, Portugal’s Galp Energia and Britain’s BG Group. The long-term nature of those potential investments has underlined the need for the EU and its member states to strengthen or maintain good political relations with the governments in Mozambique and Tanzania. But a spokeswoman for Piebalgs said the visit was not about gas and instead about immediate development assistance at a local level, including strengthening rule of law. “We will continue to support the country as long as need be,” spokeswoman Catherine Ray said. “Aid is a smart investment and is part of the answer to the crisis because we have no interest in having more poverty in the world.”

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