Good afternoon. Energy minister Estêvão Pale yesterday admitted what has been obvious for well over a year now: that the Mozambican government will have no option but to sell the domestic share of gas produced by the Coral North floating liquefied natural gas (LNG) platform, when it starts producing gas in 2028. It is a humbling admission for the economic nationalists in the government and the ruling Frelimo party, who like to argue that Mozambique does not need foreign investors and it can manage its valuable resources by itself. And it raises a fundamental question about in what direction the government wants to take the economy: down the route of more extracting and trading, or into industries that manufacture and add value.
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Ministers have talked a lot about finding commercial uses for the gas from Coral North, and from the much bigger LNG project led by TotalEnergies of France, scheduled to start production a year later. But the country is not ready. The LNG import and regasification terminal planned for the city of Matola, a project which has been off and on over the years, is now progressing, but is still in development. Nor will a pipeline to take gas from the city of Beira to Zambia be ready by 2028, or a regasification plant in Inhambane province’s Inhassoro district. In the meantime, the only thing to do with the gas is sell it.
These projects should be ready in a few years, allowing LNG to be imported and turned back into gas on Mozambican soil. The question then is what to do with it. Making fertiliser is one possibility, but plans to produce fertiliser from natural gas have failed in the past due to economics. President Daniel Chapo has talked about building a “petrochemical city” in Inhassoro, where gas could be transformed into a number of products like plastics. We have yet to see any sign that this wildly ambitious idea is going to become a reality.
