Mozambique’s gas-fueled future threatened by militants

The southeast African country’s golden vision has been thrown into doubt by an explosion of bloodthirsty assaults by a shadowy militant group in the region where the industry plans to base its hub (Shutterstock)
Updated 24 June 2018
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Mozambique’s gas-fueled future threatened by militants

  • An unprecedented wave of militant attacks in northern Mozambique has raised fears the country will fail to fully cash in on a gas bonanza
  • Since October, more than 30 people have been killed in brazen assaults on unarmed villagers

MAPUTO: An unprecedented wave of militant attacks in northern Mozambique has raised fears the country will fail to fully cash in on a gas bonanza.
After 180 trillion cubic feet (5.1 trillion cubic meters) of natural gas were discovered off the country’s northeastern shore, Mozambique entertained dreams of following Qatar down the path toward wealth. The government even predicted that by 2035, the country’s GDP per head could increase sevenfold.
But the southeast African country’s golden vision has been thrown into doubt by an explosion of bloodthirsty assaults by a shadowy militant group in the region where the industry plans to base its hub.
Since October, more than 30 people have been killed in brazen assaults on unarmed villagers.
Security forces have rushed reinforcements to be area yet seem powerless to stem the attacks. Terrorized, many civilians have fled their homes and a cloud hangs over the great expansion plans.
US oil and gas giant Anadarko, the largest exploration company in the region, has invested $4 billion (3.4 billion euros) so far — it plans to put in $20 billion over the lifetime of the gasfields.
But following a US embassy alert on June 8 that warned of an imminent attack on the regional gas hub Palma, Anadarko temporary suspended some activities and moved affected workers and contractors to a secure site.
Canada’s Wentworth Resources has already suffered delays to its projects as a result of the insecurity, forcing it to seek a year-long extension for its initial exploration.
In its successful application to the authorities, Wentworth said the attacks had “prevented safe access to the area for Wentworth staff and contractors.”
There have been more than 10 attacks on villages since October, featuring beheadings and arson. None has targeted gas operations.
“Due to the attacks, we took additional measures to protect not only the oil and gas companies operating in that area, but also to protect the communities,” said Joaquim Sive, the police commander in Cabo Delgado.
Eric Morier-Genoud, a researcher at Queen’s University Belfast, said any attack against the gas “majors” would be an “escalation from which the militants would come out the losers.”
“At this point... based on the information we have, we classify the attacks as an insignificant risk to the economy,” Rogerio Zandamela, the governor of Mozambique’s central bank, told AFP.
In contrast to this, the central bank did consider a spate of attacks carried out by a militia loyal to the main opposition Renamo party in the country’s center in 2015 and 2016 as an economic risk.
“There was much more clarity about the conflict in central Mozambique... We cannot equate the north with the south,” Zandamela said. “The information available on the conflict in Cabo Delgado is very limited.”
Police have stepped up security around gas projects — particularly those close to areas that have come under attack, national police spokesman Inacio Dina told AFP.
An official at Anadarko, who declined to be named, said “There have been no threats specific to our project. However, it is a cause for concern, and therefore, as operations continue, we have undertaken appropriate measures.”
The company has a gas operations camp in a forest on the Afungi Peninsula.
Police and army units have established a command post in the forest following the attacks.
But a source at Anadarko told AFP that the firm has also stepped up its own security efforts, increasing its private protection force by two-thirds — a move that will have an impact on costs.
Despite such problems, foreign investors for now still have a big appetite for a share of Mozambique’s gas treasures.
Japan’s Tokyo Gas and Britain’s Centrica inked supply deals with Anadarko on June 15 — just a day after a machete attack on the village of Ibu.
Even so, experts say the instability in the northeast could still prove costly. It could cut into the dividend that Mozambique expects from the huge find.
“(The gas projects) are at risk in their early stages, as attacks can adversely affect logistics. Materials must reach Palma by land,” said Maputo-based political science researcher Joao Pereira.
“The insurgency is most likely to delay rather than derail development of the sector,” said Ed Hobey-Hamsher, an analyst at global risk consultancy Verisk Maplecroft.
“Attacks will certainly make the investment more expensive because of security needs reducing revenues for the state.”


Egypt inks deal with Cyprus for power link to Europe

Updated 18 min 32 sec ago
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Egypt inks deal with Cyprus for power link to Europe

  • It is estimated the project will take 36 months to implement from the start of construction, with the lowest point 3,000 meters below sea-level
  • Phase 1 will see the interconnector carry a capacity of 1,000 MW which can be upgraded to 2,000 MW at a later stage

NICOSIA: Egypt has signed a deal with a Cypriot firm to lay a 310-kilometer (195-mile) cable under the Mediterranean to export electricity to Europe, the company said on Thursday.
Nicosia-based EuroAfrica described the deal, worth an estimated two billion euros, as a “landmark.”
“Cyprus now becomes a major hub for the transmission of electricity from Africa to Europe,” said company chairman Ioannis Kasoulides.
It is estimated the project will take 36 months to implement from the start of construction, with the lowest point 3,000 meters below sea-level.
Phase 1 will see the interconnector carry a capacity of 1,000 MW which can be upgraded to 2,000 MW at a later stage.
“The national electricity grid of Egypt will be linked to the European electricity system through Cyprus and will contribute to energy security,” Kasoulides said.
Following the crises in Crimea and eastern Ukraine, the EU has been keen to develop alternative sources of energy to reduce its dependence on imports from Russia.
In the past year, gas has started flowing from four major new fields off Egypt’s Mediterranean coast, and output is already sufficient to meet domestic needs.
The Arab world’s most populous country is now seeking to develop the infrastructure to export its newfound energy wealth, both as liquefied natural gas and as electricity.
Egypt is also seeking to import gas from fields off Cyprus and Israel to boost the profitability of the new liquefaction and export facilities it is developing on its Mediterranean coast.
In September, Egypt signed a deal with Cyprus to build an undersea pipeline to pump Cypriot offshore gas to Egypt for processing for export to Europe.
The plans have led to closer eastern Mediterranean ties, with Cyprus, Egypt, Greece and Israel holding regular high-level meetings.