Mozambique: Oil companies unlikely to return until next year - consultants
Italian oil company ENI is increasingly determined to invest in the Rovuma Basin in Cabo Delgado. Its board of directors announced the approval of its US$10 billion investment plan in November last year, and yesterday in Maputo the same company announced a series of tenders open to national and international companies, calling on Mozambican companies to get ready to provide services and supplies of equipment.
ENI had a strong presence at the second conference on oil and gas promoted by the Confederation of Economic Associations on Tuesday, and made three presentations on the various activities underway in the projects announced.
There are two major projects in the pipeline. The first – and the most advanced – is for the construction of a floating natural gas liquefaction plant; the second is another liquefaction plant located on the Afungi peninsula on the mainland.
The company’s project coordinator, Jocelyne Machevo, said that “during the design phase of the natural gas liquefaction plant project, ENI East Africa aims to boost local content by maximizing the procurement of different activities or services to be provided, without compromising the health, environmental, safety and quality requirements of the projects”.
Nelsa Mualeite, who coordinates the qualification of suppliers at ENI, presented a series of contracts, some still open and others already signed, for the provision of services in areas from construction technicians to catering and travel agents. “Any Mozambican company can work with ENI, provided that it meets all the requirements, depending on the tender we launch. Usually, what we want to know is how it is organized in terms of economic-financial structure,” he said.
But the question of local content is not a matter of consensus; there is even a deal of mistrust, which businesspeople expressed at the event on Tuesday. They have a negative image of the Sasol natural gas exploration projects in Pande and Temane, which did not generate a value chain in Mozambique, let alone the empowerment of national companies.
“We competed [for these tenders] and we did not win. Then, foreign companies, South Africans, came in and used Mozambican companies that were [considered] not qualified to provide the services,” one businessman said.
The CTA industrial sector business wing coordinated by Rogério Samo Gudo understands that Mozambican companies have the capacity to compete on an equal footing with foreign companies. “When we talk about the industry and when we talk about investments, especially in infrastructures, the first base-industry are the metal-mechanics, where we have new companies with cutting-edge technology,” he said.
In 2016, ENI was awarded a concession contract for hydrocarbon research and production in area 4 of the Rovuma Basin, about 200 km northeast of the city of Pemba and 50 km east of the district of Palma. ENI has a 70 percent stake in this block, with other shares owned by Mozambique Hydrocarbons, Portugal’s Galp Energia and to Korea’s Kogas.
CTA deputy chairman Agostinho Vuma believes that after the crisis that resulted in the national economy slipping last year from its usual 7 percent to 3.5 percent growth, this year has begun in an atmosphere of hope, thanks to investments announced and the cessation of military hostilities. “The volumes cited – we are talking about 100 trillion cubic meters in the Rovuma Basin in Palma – places Mozambique among the world’s top producers. We cannot talk about volumes like these, involving investments of about US$25 billion, without ensuring the participation of Mozambicans,” he said.
Extractive industries accounted for 4 percent of gross domestic product in the third quarter of 2016, according to data from the National Institute of Statistics.