GRAPHICS

Natural Gas Could Bring Mozambique Together

Nov 9, 2015 | 21:42 GMT

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(Stratfor)

Natural Gas Could Bring Mozambique Together Revised

For most of the 1990s and 2000s, Mozambique's ruling party focused on promoting economic development around the capital, Maputo, while overlooking the central and northern parts of the country. Since the mid-2000s, however, international interest has grown in those regions, traditionally among the country's poorest, thanks to its natural gas and coal resources and suitability as a transport node for infrastructure linked to inland African countries.

The most significant of Mozambique's potential new economic resources is its natural gas. Mozambique's massive offshore natural gas reserves primarily lie in areas known as exploration blocks Area 1 and Area 4. Controlled by Anadarko and Eni, respectively, they could attract at least $31 billion in investment over the next five years. Discoveries in Area 1 alone have totaled 2.1 trillion cubic meters of recoverable natural gas. Standard Bank noted that a full development of Anadarko's Area 1 resources would add $28 billion to Mozambique's gross domestic product over the next two decades and that additional domestic natural gas sales from Area 1 could add another $11 billion. To put this into perspective, Mozambique's GDP in 2014 stood at around $14 billion.

Mozambique's natural gas could turn the country's economy into one based on hydrocarbons. Exactly when that could happen, however, is unclear. Mozambique may need to wait until the global market for gas and natural gas recovers before Anadarko, Eni and others can commit to financing and developing its natural gas deposits. The wait could delay Mozambique's natural gas development deeper into the 2020s and perhaps even longer.