Instability in Qatar may be positive for Mozambique – S&P

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Instability in Qatar may be positive for Mozambique – S&P

2:44 CAT | 14 Jun 2017

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The Standard & Poor’s analyst who follows Mozambique said today that political instability in Qatar could have a positive effect on the country because it shows the need to diversify sources of gas production.

“From the point of view of Mozambique credit analysis, the situation in Qatar is positive because it is a ‘yellow card’ for Qatar, and motivates gas buyers to look at diversification options, especially India, which is growing very fast and has a lot of demand and little supply,” said Ravi Bhathia.

Speaking to Lusa, the S&P analyst also said that the signing of Italian ENI’s final investment decision “will help in the rating perspective because it suggests a scenario in which Mozambique will have a significant flow of funds coming in”.

A different question, he said, is whether the government will be able to capitalise on the ENI megaproject given its inexperience in negotiating large international contracts and lack of institutional capacity.

“The ENI project is good news, but the country is in a low growth stage, with high inflation and the metical now appreciating, but the fast growth phase has slowed, and this may even be positive because growth was overheated and, being very poor, with limited institutional capacity and a low GDP, and coming from a socialist ideological framework, the country had difficulties in dealing with difficult and complicated commercial transactions,” he said.

“Mozambique has not dealt well with this exuberant phase of growth and international interest” driven first by coal and then by gas, the S&P analyst concluded.

On June 5, Saudi Arabia, followed by the United Arab Emirates, Bahrain and Egypt, severed relations with Qatar, accusing the neighbouring country of “supporting terrorism” and maintaining close relations with Iran.

The severing of diplomatic relations was accompanied by the closing of borders and restrictions on air traffic, but for now all parties are disavowing any military intervention.

Qatar is the world’s largest producer of natural gas and will be one of Mozambique’s main competitors in the next decade if ongoing and planned projects for the African country go ahead.

Source: Lusa