Bulls n Bears Entrepreneurship Zone :: How the Rovuma natural gas project could transform Mozambique

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Standard Bank has made public the findings of an independent macroeconomic
study demonstrating the potential for the first phase of Area 4’s Rovuma
liquefied natural gas (LNG) project to transform Mozambique.

Once developed, the 15.2 million tonnes per annum project, expected to
attract between $27 billion and $32 billion in investment, will monetise 2.6
billion cubic feet per day of Mozambique’s offshore LNG resources, add $15
billion to $18 billion per annum to Mozambique’s gross domestic product
(GDP), and drive Mozambique towards being, in time, the world’s
fourth-largest producer of LNG.

“The first phase of Rovuma LNG has the potential to transform the
Mozambican economy and turn the province of Cabo Delgado into one of the
world’s fastest growing regions, with every prospect of developing
supporting industrial and agricultural value chains,” says Dele Kuti, head
of oil and gas for Standard Bank Group.

The successful development of Rovuma LNG could place Mozambique in pole
position to become a long-term leading supplier of LNG to some of the
world’s largest economies, including China, as they deepen fuel-switching
policies aimed at replacing coal with cleaner gas as an energy source.

The Rovuma LNG project’s first phase is targeting a final investment
decision in 2019.

Depending on capex scenarios, Rovuma LNG Phase 1, in addition to GDP
growth, is expected to, “increase annual gross national product by $10 to
$14 billion, while contributing $4 to $5 billion per annum in government
revenues over the next 25 years,” says Paul Eardley-Taylor, head of oil and
gas, Southern Africa, for Standard Bank. Rovuma LNG is also expected to
increase Mozambique’s projected real growth rate from 4% to between 4.8% and
5.4% (depending on scenario).

>From an employment perspective, it is anticipated that Rovuma LNG will
employ approximately 20,500 construction workers and 1,300 operational
workers. The project’s activities are also expected to create many more
additional employment opportunities from various value chain and
reinvestment activities associated with the support, supply and profits
arising from the commercial operation of Rovuma LNG.

Global supply potential aside, Rovuma LNG will form the nucleus of what
will be, in time, a substantial domestic gas industry in Mozambique. This
industry is also expected to have broader regional supply potential.

“It is anticipated that the development of a domestic gas industry in
Mozambique will help the government achieve its vision of having a domestic
gas sector running parallel to its LNG export capability. This will drive
broader national development and social transformation, especially with
regard to domestic small and medium-sized enterprise formation,” says
Eardley-Taylor.

On a cautionary note, the study calculates that any delays to Rovuma LNG
would have a negative economic impact upon achieving the targets currently
projected.—Howwemadeitinafrica 



 

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