Energy will modernise Mozambique

It is said that energy is the industry that drives all others. In the case of Mozambique, this statement is truer than in any other part of the world.

Energy will modernise Mozambique
The country’s energy potential, both in hydrocarbons and hydroelectrics is huge. The ongoing projects in this area will truly transform Mozambique and such is their power, they will dictate the future direction of the entire country’s economy.

While the challenges are large and complex, the opportunities are even greater. But these ventures will only be successful if robust governance and prudent management is in place. Yes, this tree will bear fruit, but only if the correct seeds are sown.

The most important project, involving Galp as a sponsor is, without question, the development of the reserves of around 85 trillion cubic feet (tcf) of gas identified in Area 4 of the Rovuma basin and the 75 tcf of additional reserves in an adjacent block, Area 1.

Collectively, the reserves in these two blocks are equivalent to the total consumption in Germany, the United Kingdom, France and Italy for 20 years, propelling Mozambique as one of the most important regions worldwide for natural gas production.

The size and quality of these resources enable Galp to develop a large‑scale project at very competitive unit operating costs in a strategically significant location (in the context of other LNG1 projects) as it is equidistant from the European and Asian markets. 

The first gas shipments are expected to be delivered to the market in 2022, using an innovative floating unit that converts natural gas to a liquid state, enabling its export by sea to anywhere in the world.

Central to this project, however, are the major industrial gas liquefaction units to be built on land in the Cabo Delgado province.

Galp is an active participant in the Area 4 project; led by Eni it has a 10% stake and ExxonMobil, which is finalising its involvement, will lead the construction and land infrastructure operations. The Korean company, Kogas, and ENH, owned by the state of Mozambique have identical holdings of 10%, while the Chinese company, CNPC, has an indirect stake of 20%.

This project will also be crucial to the Mozambican population, impacting several generations. It is therefore an objective of Galp and its partners to ensure that the said impact is as positive as it can be.

Although there is presently an abundant supply of gas at a global level, worldwide consumption is expected to increase significantly in the coming years, primarily due to its low environmental footprint which makes it a key element in the transition to a low‑carbon economy.

In order to meet the South Coral field development projections (via the floating liquefaction unit), and the Mamba project (based on land liquefaction units built in the Afungi peninsula in Palma), the Government of Mozambique may receive tens of billions of dollars in tax revenues, royalties and profit throughout the projects’ lifespan.

In addition, multiple industries in the region will be competing to access to this energy, improving their efficiency and bringing development to one of the country’s most impoverished areas.

However, such transformational challenges are not limited to these big projects; there are opportunities for development and modernisation further down the supply chain, namely in the import, storage and distribution of fuel.

Galp has been involved in this since 1957 and is a long‑term investor in Mozambique, contributing to its social and economic development and adoption of suitable energy solutions.

Within its corporate social responsibilities, Galp has introduced, in cooperation with the Government’s FUNAE department, the installation of photovoltaic solar panels in rural communities, connecting power supplies to among others, healthcare centres, schools and water pumping systems.

Mozambique is the only African market where Galp is present in both ends of the supply chain. It is a significant market for Galp and one which continues to grow through substantial investments for example in logistics and infrastructure and through the construction of terminals for the storage of liquid fuels and bottled gas (LPG) in the country’s main ports.

Galp is also increasing its capacity for the storage and filling of LPG bottles, replacing domestic consumption of coal, wood and electricity. This enhances the population’s quality of life, tackles deforestation and reduces pollutants. 

And Galp continues to significantly expand its network of stations and shops in Mozambique; it currently has 50 stations and 41 shops and by 2020 expects to more than double the network it had at the beginning of 2016. 

This demonstrates Galp’s commitment to further developing an energy sector that moves Mozambique forward on a wave of modernisation and above all, improves the living conditions for all Mozambicans. This is where we focus all our energy.

By Paulo Varela

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