David Figueira Bourton discusses the socio-economic impacts of Mozambique’s plentiful gas reserves, and questions whether there are more problems lying beneath the surface.
In 2010, Anadarko Petroleum, the US energy company discovered extensive gas reserves in the ultra-deepwater Rovuma Basin off the coast of Cabo Delgado – the northernmost province of Mozambique bordering Tanzania. Similarly, the year after, Ente Nazionale Idrocarburi (ENI), an Italian multinational oil and gas company also found a large offshore gas reserve forty kilometres off the coast of Cabo Delgado; this spurred further interest into the region by foreign energy companies such as China National Petroleum Corporation (CNPC), ExxonMobil and BP. Since 2010, the known natural gas reserves in Mozambique have increased from almost nothing to more than 165 trillion cubic feet (Tcf). Mozambique now stands as the third biggest reserve holder for natural gas on the continent after Nigeria and Algeria, with the province of Cabo Delgado being the epicentre for exploration containing the three largest liquid natural gas (LNG) projects in Africa.
The Mozambican government hoped that the discovery of natural gas reserves would prove to be a critical juncture for the country in attracting new foreign direct investment, and trickle-down job creation to bring about economic prosperity in poorer regions of the country. According to the UN Environment, construction of the new natural gas projects is estimated to create more than 700,000 jobs by 2035, and add $39 billion to the economy in the next twenty years. Nonetheless, not much has changed and Mozambique remains dependent on international donors such as the IMF. The country has been through various adjustment programmes since its independence from Portugal in 1975, and civil war between the current governing party of FRELIMO against the anti-communist insurgents of RENAMO. Yet multinational oil and gas companies like Total, who took over from Anadarko Petroleum in 2019 as the main operator of its 12.9mn t/yr Mozambique LNG Project, could be the catalyst for change.
For the Mozambique LNG Project alone, Total’s foreign direct investment of $25 billion would be nearly double the country’s current GDP ($14.93 billion). Other projects include the Rovuma LNG Project worth $30 billion and the Coral FLNG Project worth $4.7 billion. Furthermore, with Mozambique’s domestic need for natural gas being low, the government anticipates that the construction of these projects will assist the country in becoming a serious exporter for natural gas, competing with nations such as Qatar and the United States – by 2023 it is estimated that Mozambique will become the third largest natural gas exporter in the world.
However, the promise of trickle-down economic prosperity hasn’t translated in reality so far, not even to the people in provinces like Cabo Delgado where LNG exploration is focused. Instead, for certain communities the introduction of these energy companies have led to issues such as displacement from their home soil to distant lands. In 2016 a report compiled by Anadarko Petroleum for the Mozambique LNG Project stated that 952 people would lose access to their cultivated land and more than 550 families would be relocated to make way for the project. Mozambique’s 1997 Land Law asserts the state with complete ownership of all land and the government as the authority on allocating land rights – this has allowed for land to be transferred from citizens to multinational energy companies. These resettlements have led to conflicts between communities over the close proximities of allocated farmland; though for some families, they are yet to receive any form of reallocated land. Moreover, some families who were solely reliant on the sea for their livelihoods now face the difficulty of being relocated far away from the coast, raising uncertainty about how they will continue to make a living.
Cabo Delgado, a province currently facing conflict from Islamist militants, also faces the environmental issues associated with gas drilling such as increased emissions and local ecosystem damage. The LNG projects in the province, both onshore and offshore, will escalate the carbon and greenhouse gas emissions of the country, intensifying the effects of climate change which have already impacted Mozambique in recent decades. The Mozambique LNG Project alone is expected to increase the greenhouse gas emissions of Mozambique close to 10% by 2022. In the Quirimbas Archipelago off the coast of Cabo Delgado, the UNESCO biosphere containing mangroves and coral reefs is now under threat by the impacts of dredging and waste disposal from a gas field 8km away. The archipelago is home to 447 bird species, forty six species of terrestrial mammals and 3,000 floral species which are at risk from the effects of gas exploration.
Thus, the future prosperity of Mozambique will depend upon the actions which the government takes in order to make sure that the promised jobs, and trickle-down effects from the construction of gas infrastructure projects come to fruition in Cabo Delgado and across the country. Yet if the government continues down its current road which has had little impact on improving the livelihoods of its citizens, and has failed to prepare local communities for the effects of climate change exacerbated by gas drilling, the future of Mozambique looks to be on course for disaster rather than a dream.