Anadarko announcement has improved Mozambique’s economic prospects – Standard Bank

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Anadarko announcement has improved Mozambique’s economic prospects – Standard Bank

5:38 CAT | 05 Jul 2019

in file CoM

Standard Bank’s Economic Studies Unit said yesterday that the recently announced final investment decision (DFI) by Anadarko for gas exploitation in Area 1 of the Rovuma basin had improved Mozambican economic prospects.

“As expected, the FID for the Area 1 natural gas project announced by Anadarko has considerably improved the medium- and long-term prospects for the Mozambican economy,” Fáusio Mussá, chief economist at Standard Bank, said in a note distributed to the press on Friday.

The FID announcement last month concerns an infrastructure investment of US$25 billion (about EUR 22 billion), in which the consortium will engage in the extraction, liquefaction and maritime export of natural gas in Area 1 of the Rovuma Basin, northern Mozambique, and it is due to start operating in 2024.

The Standard Bank Economic Studies Unit says the FID is also having an impact on the local currency, whose appreciation is, according to the bank, expected to continue in 2020.

“This also takes into account the weak aggregate demand, evidenced by a decline in GDP growth, which, according to the National Statistics Institute, recorded a year-on-year of 2.5% drop, in the first quarter of 2019, after an annual growth rate revised upwards to 3.4% in 2018,” it adds.

Standard Bank notes that trading conditions improved again in June, with Mozambican companies again signalling a strong increase in new business.

“The overall index dropped from 52.3 in May to 52.0 in June, signalling a slight improvement in operating conditions in the Mozambican economy,” the note points out, adding that companies saw an increase in production due to greater commercial activity, and the improvement of meteorological conditions after two cyclones struck the centre and north of the country in March and April.

“Companies also sought to take advantage of lower acquisition costs by increasing the purchase of means of production,” concluded one of the main Mozambican banks, which also highlights an increase in employment during the month of June.

In addition to Anadarko’s FID, the announcement of a further investment the same size by a consortium led by Eni and Exxon Mobil is expected in the second half of the year for Rovuma Basin Area 4.

Source: Lusa