Standard Bank forecasts economic recovery in 2019 – AIM report

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Standard Bank forecasts economic recovery in 2019 – AIM report

8:38 CAT | 07 Feb 2019

In file CoM

An economic study by Standard Bank expects Mozambique’s economy to recover slightly in 2019 with growth increasing from 3.5 per cent in 2018 to 3.7 per cent this year and 3.9 per cent in 2020.

According to the bank’s economists, “we estimate that the economy bottomed out last year, with a growth of 3.5 per cent due to the low disposable income of households”. The analysis also notes that the country has a public debt ratio of 106.5 per cent of gross domestic product (GDP) [in comparison, the United States has a debt to GDP ratio of 103.8 per cent and the United Kingdom 98.2 per cent]. The bank does not expect to see significant growth in GDP before the production of liquefied natural gas (LNG) begins, which it estimates will be in 2023.

There are two major LNG projects that are due to come on stream at some point between 2022 and 2024 – both located in the northern province of Cabo Delgado. The first to deliver LNG for export will be a floating liquefied natural gas (FLNG) facility producing 3.4 million tonnes of LNG per annum from Offshore Area Four in the Rovuma Basin. The operator in Area Four is the Italian company ENI, and its partners are American oil and gas giant ExxonMobil, the China National Petroleum Corporation (CNPC), Kogas of Korea, GALP of Portugal, and Mozambique’s publicly owned hydrocarbon company ENH.

Meanwhile, the Texas-based company Anadarko Petroleum is close to taking its final investment decision for the development of neighbouring Offshore Area One. This will involve piping the natural gas onshore to Palma district where an LNG facility will be constructed to produce 12.88 million tonnes of LNG per year beginning perhaps as soon as 2024. Anadarko’s partners in the project are ENH, the Japanese company Mitsui, the Indian companies ONGC Videsh Ltd, Beas Rovuma Energy Mozambique Ltd and BPRL Ventures Mozambique, and PTTEP of Thailand.

In addition, Standard Bank expects the ENI/ExxonMobil consortium to take its final investment decision in the second half of the year for a land-based LNG facility which will also be located in Palma.

In a further briefing released yesterday, Standard Bank noted that there is an increasingly favourable legislative environment in Mozambique

Source: AIM