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Coronavirus and falling oil prices may impact natural gas projects in Mozambique
1:41 CAT | 13 Mar 2020
Photo: A Verdade
The coronavirus pandemic and the drop in oil prices could delay the start of natural gas production in the Rovuma Basin. “We are in a very sensitive situation globally,” the Chairman of the National Petroleum Institute (INP) has acknowledged. Dozens of oil workers in Cabo Delgado are quarantined and unable to work.
The isolation and quarantine measures imposed by the Chinese authorities to halt the spread of Covid-19 has halved economic activity in the Asian giant, dictating a cut of about 20 percent in its oil consumption. China being one of the main world buyers of crude oil, this has caused a glut in oil, whose price, in the absence of an agreement to reduce production in the Organisation of Petroleum Producing Countries, has fallen from 50 to 60 US dollars to 30 to 40 US dollars a barrel.
A greater supply and the low price of oil results in a decreased appetite investments in new sources of energy such as the natural gas in the Rovuma Basin, Cabo Delgado province.
Confronted with this scenario by @Verdade, the Chairman of the INP Board of Directors, Carlos Zacarias, declared:
“We are in a very sensitive situation globally, characterised by the coronavirus and also by the fall in the price of oil, which apparently has to do with some disagreement between some countries within OPEC. I hope that this drop in oil prices will not last for long and will not have a negative impact on the investments that are being made.”
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The truth is that, although the final investment decision for natural gas exploitation in Cabo Delgado’s Golfinho and Tuna fields were taken in mid-2019, the anticipated billions of dollars have not yet begun to flow into the Mozambican economy because banks have not yet completed financing operations for each of the seven shareholders. The National Hydrocarbon Company (ENH), indeed, has not yet managed to start the bank financing process.
Another project that may suffer delays is the exploitation of the Mamba and Prosperity fields by the ExxonMobil-led consortium, whose final investment decision is eagerly awaited this year.
Total Mozambique “takes the threat of coronavirus very seriously”
At the same time, restrictions on travel around the world, and in Mozambique in particular, could affect ongoing activities in Cabo Delgado, where at least 37 foreign citizens have been quarantined on their arrival from countries where the Covid-19 pandemic is highly prevalent.
It might be noted that the main investors in the Rovuma Basin are companies from Italy, France, the United States of America, Japan and China, countries with high local transmission of the new coronavirus.
Contacted by @Verdade, Total Mozambique stated that it “takes the threat of the coronavirus very seriously and is committed to undertaking all practical measures to prevent its transmission in Mozambique”.
“We are in close contact with the Mozambican health authorities, and will follow their guidelines regarding quarantine and other measures to the letter. The company is limiting all international travel to that considered vital for operations and has plans to ensure that the impact on the project is mitigated whenever key personnel are unable to travel,” the French oil major leading the project in the Golfinho and Tuna fields added.
Eni, the Italian oil major leading the project in the Coral South field and partner of ExxonMobil in the Mamba and Prosperidade fields, promised to answer to @Verdade’s request for clarification but had not done so at the time of publication.
In addition to restriction on the movement of its foreign employees, it might be noted that Eni is building its floating liquefied natural gas plant in South Korea, the third-worst affected country in the world regarding the coronavirus outbreak.
By Adérito Caldeira
Source: A Verdade
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