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Mozambique  

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Last Updated: April 2016

Overview


Map of Mozambique
Map of Mozambique
  • There have been prolific natural gas discoveries in Mozambique's northern offshore Rovuma basin since 2010 that have the ability to transform Mozambique into a substantial exporter of liquefied natural gas (LNG). However, international companies involved have not made a final investment decision and LNG exports are unlikely to start before 2020.
  • Although Mozambique's Tete Province is estimated to hold large untapped coal reserves, the development of Mozambique's coal resources has presented major challenges. The country's coal mines are far from the coast, and inland transportation and port capacity restraints have limited production. The economics of producing and transporting Mozambican coal under the current low price climate is unfavorable. As a result, some major companies have either fully or partially divested their coal assets in Mozambique, which has slowed the pace of infrastructure development necessary to alleviate production and transportation bottlenecks.

Natural gas

  • According to the Oil & Gas Journal, Mozambique holds 100 trillion cubic feet (Tcf) of proved natural gas reserves, up from 4.5 Tcf a few years ago, placing the country as the third-largest proved natural gas reserve holder in Africa, after Nigeria and Algeria.
  • Mozambique currently produces a small volume of natural gas. In 2014, Mozambique produced almost 198 billion cubic feet (Bcf) of natural gas, according to Cedigaz data. Most of Mozambique's production was exported (134 Bcf) to South Africa via the 535-mile Sasol Petroleum International Gas Pipeline, and the remainder was consumed locally (64 Bcf).
  • The U.S.-based Anadarko and Italy-based Eni are leading exploration activities in Mozambique's offshore Rovuma Basin. Anadarko made several natural gas discoveries in Area 1 (Prosperidade and Golfinho/Atum complexes), amounting to more than 75 Tcf of recoverable gas resources. Eni's natural gas discoveries are in Area 4 (Mamba complex and the Coral site), and recoverable gas resources are estimated to be more than 85 Tcf.
  • The Prosperidade and Mamba Complexes straddle the boundaries of Area 1 and 4, and unitization (joint development of reserves that are under separate licenses) between the overlapping areas is required under Mozambican law. Anadarko and Eni have agreed to develop 12 Tcf of natural gas each in the overlapping area and construct a LNG facility with two trains with a capacity of 6 million tons (288 Bcf) per year each. The LNG project is expected to cost $15 to $17 billion. Anadarko and Eni are expected to reach a final investment decision to develop the gas resources and build the LNG facility by 2017. Also, Eni is considering independently building a 2.5-Mmtpa (or 120 Bcf) floating LNG facility in Area 4.
  • Because of the high costs to develop an LNG facility, the Mozambican government is considering a proposal to construct a pipeline from Rovuma to Gauteng, South Africa to deliver gas to Mozambican towns along the pipeline route before delivering the natural gas to South Africa. SacOil, a company backed by South African Investors, is spearheading the proposal and has partnered with China Petroleum Pipeline Bureau. The pipeline is estimated to cost $6 billion, but that amount may be underestimated, as cost overruns are common with pipelines built in the area, according to Newsbase AfrOil.

Coal

  • Mozambican coal production increased to 6.7 million short tons in 2013, up from 39,000 short tons in 2010. In 2013, Mozambique exported more than 4.2 million short tons, which mostly went to Asia, Europe, and South Africa. Mozambique consumes a small fraction of its coal production, and the reminder that is not exported is stored.
  • The pace of coal production growth in Mozambique has slowed, although some progress is still being made to expand the industry. Lower global demand for coal and lower prices, coupled with severe infrastructure constraints to transport and export coal in Mozambique, have lowered the commercial viability of the country's coal production. In addition, Mozambique produces a much larger portion of thermal coal (used for power generation) and a smaller portion of coking coal, also known as metallurgic coal (mostly used to produce steel). Generally, thermal coal is less profitable than coking coal.
  • Brazil's Rio Tinto, a major investor in Mozambique's coal industry, sold its coal assets in October 2014 to India's International Coal Ventures Private Ltd after experiencing substantial financial losses from its coal operations in Mozambique. The government had denied Rio Tinto's request to ship its coal by barge down the Zambezi River, which contributed to the company's decision to pull out. Another major investor, Brazil's Vale, has sold stakes in its coal operations and its Nacala rail and port project to Japan's Mitsui & Co Ltd after experiencing similar financial losses.
  • Coal exports are transported via the rehabilitated 360-mile-long Sena railway from the inland Moatize coal mines (Tete Province) to the Beira port. Sena's capacity is roughly 6.6 million short tons (6 million metric tons) per year if fully operational, but its actual throughput is much less and trains cannot run at full speed. The Sena line's capacity has not been enough to accommodate the rapid production growth, forcing some companies to limit production and/or truck coal to the coast. There are plans to increase Sena's cargo capacity to 22 million short tons (20 million metric tons) per year. However, plans have been repeatedly delayed.
  • Small-scale transportation and exports have started at the Nacala Rail Corridor project. The project connects the Moatize mines to the Nacala port via a 560-mile railway line, and is expected to eventually bring online almost 20 million short tons (18 million metric tons) per year of coal transportation capacity in 2017.
  • Coal supply disruptions are common in Mozambique because of floods, rail collapses, and security risks posed by rebel groups.
  • Other projects under consideration include: a 326-mile railway line from the Moatize mines to Macuse in the Zambezia province, additional coal export terminals at Nacala, and a new coal terminal at the Beira port.

Electricity

  • According to the latest 2013 data from the International Energy Agency (IEA), 66% of Mozambique's population living in urban areas has access to electricity; while a mere 27% of the rural population has access to electricity.
  • Electricity net generation in Mozambique was 15 billion kilowatthours in 2013, of which almost all was from hydropower and a very small amount from natural gas. The vast majority of the population relies on traditional biomass and waste (typically consisting of wood, charcoal, manure, and crop residues) for household heating and cooking.