Emerging East African offshore industry
drives demand for technology, services
Mozambique LNG exports expected to begin in 2021
The string of natural gas discoveries off- shore Mozambique, amounting to more than 100 tcf, could position the country among the world’s largest natural gas producers by 2021. The technology and
infrastructure needed to get this and other natural resources to international markets is driving
economic development in the local oil and gas
In the below Q&A, Fiyona Guitunga, commercial assistant with the US Embassy in
Maputo, Mozambique, discusses these opportunities. She is part of the US Commercial Service’s worldwide network of offices in
more than 100 US cities and US embassies
and consulates in more than 75 countries that
help US companies export.
US Department of Commerce (DoC):
Mozambique is a new post for the US Commercial Service. What is the economic outlook for the country?
Guitunga: The economic growth outlook
for Mozambique is positive despite the lower
growth this year. The economy is expected
to grow due to the recent natural gas discoveries accompanied by other emerging industries. Public expenditures and foreign direct
investment are the main drivers of growth.
According to the World Bank’s Country Report, Mozambique’s annual growth averaged
7% over the two last decades. However, during the last quarter of 2015, the depreciation
of the metical (the currency in Mozambique)
against the dollar had an unfavorable impact
on economic activity, resulting in a lower
GDP growth rate of 5.9% for the year.
Once the final investment agreement is
made between the Mozambican govern-
ment and Anadarko, the main operator of
the natural gas field in Area 1, it is likely to
trigger significant economic growth in the
country through greater access to natural
gas that will go toward electrical genera-
tion and increased exports, while acting as
a catalyst for increased foreign direct in-
vestment. In addition to natural gas, the
mining of coal, graphite, and semi-precious
stones are also becoming important export
industries, and are driving the development
of deepwater ports and interior transport
systems to move goods to East African and
global markets. The modernization of ports
and transport infrastructure will also benefit
the natural gas equipment supply chain.
DoC: What has been the country’s reaction to the discovery of
natural gas in the Rovuma basin and
the resulting foreign investment?
Guitunga: There is a lot of excitement in the government and private
sector. Despite the low price of oil
and natural gas around the world,
the discovery could bring a lot of
prosperity to the country if developed prudently. Further, the government is carefully considering the
impacts of the discovery on the economy, and
is seeking to promote broad economic growth
and a higher standard of living for its citizens.
DoC: What kinds of export opportunities
for US businesses could result from the discovery? Are there sectors with the most potential, or supply chain opportunities?
Guitunga: Natural gas exports from the
offshore Area 1 are not likely until 2021. Once
LNG infrastructure facilities are constructed
and delivery contracts signed, natural gas ex-
ports are anticipated to begin that same year.
However, building the infrastructure neces-
sary to extract and transport the offshore gas
to onshore storage port facilities is a major
effort. The LNG project and the gas deposits
are of such great size that the infrastructure
to build and operate it requires significant de-
velopment in the remote location site. This will
in turn drive the development of all sectors in
the region. Once LNG exports be-
gin in 2021, the additional revenue
will enable Mozambique to upgrade
its educational and healthcare sys-
tems, improve its travel and tourism
centers, and develop other sectors.
DoC: What are the specific local content requirements as they
apply to the offshore oil and gas industry, and are they attracting foreign investment into the industry?
Guitunga: Mozambique’s local
content requirements continue to evolve, especially with regard to local employment. Under Mozambique’s labor laws, there are established limits for the number of foreigners
that can be hired. However, companies may
be able to negotiate this quota when they set
up their businesses, if they can prove a lack
of locally skilled labor. Further, the country’s
local content vision is reflected in its 2014
updated Petroleum Law. The law stipulates
for the oil and gas sector that a purchasing
preference be granted to Mozambican goods
and services to the extent they are of comparable quality to foreign goods and services
and their cost does not exceed that of foreign
goods and services by more than 10%. The
law also promotes opportunities for local
companies to hold equity stakes in oil and
gas projects and requires that operators and
service companies provide employment and
training for Mozambican nationals.
DoC: Can you tell us more about the opportunities for technology transfer and for
offshore equipment suppliers?
Jennifer Stone Marshall
US Department of Commerce
Offshore Area 1 in the Rovuma basin.
(Map courtesy Anadarko)