For far too long, descriptions of Mozambique have contained the some variations such as: Mozambique one of the poorest least developed countries in the world faces endemic droughts, floods and widespread poverty.
But we’re closer than ever now to changing that narrative, to being able to say: By strategically managing its vast natural gas resources, monetising them, and harnessing them to industrialise the country and develop its private sector, Mozambique is ushering in a new era of widespread economic growth and stability.
Unfortunately, not everyone agrees with this vision. A number of environmental organisations argue that the benefits of natural gas production in Mozambique are negligible and not worth the environmental costs.
Last month, the Chief Executive Officer and Executive Chairman African Energy Chamber, NJ Ayuk, made a case for Mozambique developing its natural gas resources to build its economy. He criticised some environmental groups – United Kingdom-based Friends of the Earth in particular – for attempting to interfere with the UK government’s $1bn funding commitment to Total’s Mozambique Liquified Natural Gas Project. (Export credit agency, UK Export Finance, had agreed to contribute funding because of the project’s potential to transform Mozambique’s budget and create jobs in the UK.)
Shortly after Mr. Ayuk released his piece, Ilham Rawoot, a journalist who works for Friends of the Earth Mozambique (Justica Ambiental) and the coordinator of the organisation’s No to Gas! campaign, responded with an equally passionate opinion piece opposing his stance. Taking issue with Ayuk’s commentary on environmentalists’ interference and his views on the LNG potential benefits, she asserted that Mozambique would be better off without natural gas production or LNG projects.
I respect Ms. Rawoot’s right to express her views on African or any other matter. I only wish that she, and others who are intent on saying “no to gas” in Mozambique, could start by making a thorough analyses on the pros and cons of Mozambique developing its vast natural gas reserves. The spill-over and multiplier effect in terms of socio-economic development, from training and capacity building, employment, government revenue, industrialisation through domestic gas utilisation and energy security.
Natural gas production truly represents an opportunity for Mozambicans, and there are solid reasons to believe that Mozambique can take the steps necessary to reap significant benefits from the three LNG projects currently being developed here: the Total LNG project, valued at $23bn; the ExxonMobil-led Rovuma project valued at $23.9bn; and the $4.7bn Coral Floating LNG project. But not only that, I’ve witnessed the positive impact of natural gas industries in other jurisdictions, from Trinidad and Tobago, Qatar, Nigeria, Australia, Norway and the United States of America. These are some of the reasons I’m confident when I say that we, Mozambicans, can shift our country’s trajectory for the better. We can transform our reality from poverty, despite our resources, to prosperity because of them.
We need this opportunity
From my perspective, we should welcome Mozambique’s natural gas industry and LNG projects, more importantly because there is empirical evidence demonstrating that in Mozambique, the tangible benefits resulting from LNG projects outweigh by far any negative impact. Currently, economic opportunities in Mozambique are at a minimum, and natural gas production has the potential to simultaneously meet multiple pressing needs: job creation, capacity building, economic diversification, access to power and more importantly, poverty alleviation.
To have a sustainable economic development, through industrialisation, Mozambique needs to increase access to power. The Mozambican Petroleum Law 21/2014, states, “Petroleum resources are assets whose proper exploitation can contribute significantly to national development.” This position is echoed in the Mozambican Gas Masterplan, which suggests that the government should develop natural resources in a manner that maximises benefits to Mozambique’s society, to improve the people’s quality of life, while minimising adverse social and environmental impact.
So many of our struggles in Mozambique are rooted in our lack of reliable electricity: Only 29 per cent of our population has access to power. To tackle the limited access to power by Mozambicans, the Petroleum Law 21/2014 incorporates a clause on domestic gas, that 25 per cent of the natural gas produced in Mozambique must be used domestically. As a result of domestic gas obligations, we are starting to see sizeable new investments in gas to power projects in Mozambique, such as the Ressano Garcia CTRG project, the Kuvaninga project, the upcoming Temane Regional Electricity project, which will include a 400MW gas-fired power plant and the planned 250MW electricity plant in the Nacala district that will be fuelled by gas from Mozambique’s Rovuma Basin.
Keep the long game in mind
Ms. Rawoot states that few of the construction jobs for the Total’s LNG plant have gone to locals, and she’s right. But to be fair, the LNG industry in Mozambique is in its infancy and we don’t yet have the trained labour force capable of participating in the oil and gas industry. As much as we would love to have 70 per cent of Mozambicans building everything, we still need international companies with the necessary skills to get the work done on time and on budget. Training is underway, but the experience and technical know-how are not there yet. However, that doesn’t mean we should kill the projects. We have to push forward, and at the same time, work on building local content laws that promote the inclusive participation of Mozambicans in the oil and gas industry. I hope we’ll see the western environmental community supporting these efforts. They can be a powerful and important voice on the importance of local content that promotes the inclusive and sustainable participation of Mozambicans in the oil and gas projects.
When the Mozambican Oil and Gas Chamber and the African Energy Chamber talk about job creation from LNG projects, we’re not simply referring to construction jobs; we’re also talking about qualified and highly skilled jobs in the plants once they’re operational, jobs with local companies contracted by the plant, and also, jobs created as Mozambique harnesses its natural gas industry to industrialise its economy.
Gas is just the beginning
The tourism industry in Southern Africa was growing exponentially before the Coronavirus Disease crisis and will return to growth after the pandemic. Mozambique’s natural gas can be a catalyser for the growth of the tourism industry. The government has tourism as one of its economic pillars and although the tourism industry has been severely hurt by cyclones and COVID-19, its great potential remains untapped.
Despite its great potential, Mozambique’s tourism industry will not be able to grow and flourish without reliable power. Even with our pristine beaches, and some of the most beautiful islands in the world, only a few tourists will come if we don’t have reliable power. We want tourists to be able to enjoy our beautiful country, and we want a dynamic tourism sector that contributes to long-term economic growth and job creation. To achieve that, we need reliable power and infrastructure. Mozambique can achieve all of that with LNG production and revenue.
Impact of natural gas production in Mozambique on agriculture
In its five-year economic plan, the government of Mozambique indicated agriculture as its top priority. Currently, nearly 80 per cent of our population works in the agriculture sector, and it generates about 25 per cent of our Gross Domestic Product. However, due to low productivity levels, too many of our farmers still live in abject poverty. That can be changed, though. Simply by using fertilisers, farmers can enhance their yield by nearly 40 per cent. While imported fertilisers are too expensive for the majority of our farmers, Mozambique can create a more affordable option. By building infrastructure to transform natural gas into nitrogenous fertilisers, not only would Mozambique help its farmers, but it would also create local job opportunities. Mozambique could reduce significantly its imports of agricultural products from South Africa and become an affordable source of food for domestic consumption.
Natural gas monetisation is doable
I understand why some are sceptical about Mozambique’s ability and resolve to manage LNG revenues in a way that benefits our population. It’s true: The oil and gas industry hasn’t always been good for Africa’s people. We have seen our share of government rent-seeking and corruption in the continent. We’ve also seen the impact of resource curse, even pre-resource curse. This is why the Mozambique Oil and Gas Chamber, Ayuk, the African Energy Chamber and other African Oil and Gas Organisations are working together to change the gloomy narrative of the oil and gas industry in Africa. We are new African voices in the industry, committed to transparency, good governance, economic growth and sustainable development.
I am certain that Mozambique can benefit from the painful lessons some African petroleum-producing countries have learned up to now, from disastrous policies to successful diversification of their economies. We can also learn from positive examples, such as the twin-island of Trinidad and Tobago, which, like Mozambique, has sizeable reserves of natural gas. Government initiatives in Trinidad and Tobago led to significant foreign investment into downstream, gas-based projects. And that, in turn, sparked increased activity in the construction, distribution, transport and manufacturing sectors.
Looking at emissions in proportion
Naturally, protecting the environment is a major concern of Ms. Rawoot, Justica Ambiental, and similar organisations – and it’s very important to us.
Global electricity demand is expected to increase by 70 per cent by 2035, gas-fired generation almost doubling to facilitate this. It is also expected that the share of natural gas in the global energy mix will be higher than that of coal and oil by 2035.
The projected growth in the energy sector has to take into account the growing concerns regarding climate change. But, combating climate change effectively should not conflict with human progress and poverty alleviation.
With regards to natural gas, its scope in the reduction of carbon emissions is significant, as natural gas with lower default carbon content of 15.3 Kg/GJ, is a cleaner option compared to coking coal (25.8 Kg/GJ) and crude oil (20 Kg/GJ). Natural gas is indeed an option for delivering industrial emission targets. In other words, natural gas is a bridging fuel by providing a low-carbon energy alternative to other fossil fuel sources.
What about the potential environmental impact of using natural gas to power in Africa?
It has been estimated that if we triple electricity consumption in sub-Saharan Africa, all with natural gas, we would produce the equivalent of 0.62 per cent of annual global emissions – less than the average yearly global increase over the last decade.
In Mozambique, given our natural propensity for cyclones and other natural disasters, protecting our natural habitats and wildlife as well as keeping the planet healthy for future generations has long been a priority, and will remain one. However, rather than discarding LNG projects, we should be working together to find a way to develop them in an environmentally-responsible manner.
Mozambicans have a say in Afungi relocation
Rawoot argues that Total’s LNG plant not only represents an environmental threat, but also one to local people and communities. Total, she writes, took the homes of 556 families for their LNG plant and failed to compensate them fairly. Those claims are unfounded. This is a matter that was comprehensively discussed between the civil society and the Mozambican government. Currently, the government is engaged in productive conversations with citizens and businesses on this matter. Further, the oil and gas companies in Mozambique have been very sensitive to issues that impact communities and have encouraged communities to be active in the land acquisition process, a process that includes relocation, compensation, restoration of livelihoods and the creation of a community development fund for resettlement-affected communities. Additionally, through a non-government organisation, legal assistance has been provided to households signing compensation and resettlement agreements.
Let’s remove motivator for violence
I won’t deny Rawoot’s point that Mozambique has struggles, including armed conflict and terrorist attacks. Insurgency in Cabo-Delgado is a fact and there is no simple solution to this dilemma. I however believe that our government, in partnership with the civil society and international community, will reach a durable peaceful solution, a sine qua non condition for the viable exploitation of natural gas in Cabo-Delgado.
I also agree with Oscar Kimanuka of Rwanda, the journalist who recently noted that unemployment in Northern Mozambique might be a key factor for youths to join the extremists.
It seems logical, then, that creating employment opportunities could, at least, make it more difficult for extremist militant groups and terrorists to recruit our young people. Therefore, harnessing our natural gas resources to grow our economy is a sustainable solution.
Mozambicans deserve chance to help selves
I understand that Mozambique has its share of complex challenges, and natural gas isn’t a perfect solution. At the same time, it is preposterous for Rawoot to suggest that Mozambique must jeopardise a projected LNG investment of $55bn, equivalent to four times the size of the country’s GDP and forgo government revenues over the next 25 years that are estimated to increase by $4bn to $5bn yearly.
Mozambique cannot afford to continue being a country where government budget depends on international donors’ goodwill. We want Mozambicans to have the dignity of work and of building an inclusive and respectable nation. Harnessing natural gas to address poverty alleviation is a suitable solution.
*Mucave is Executive Chairman, Mozambique Oil and Gas Chamber
