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Analysts Say Rovuma LNG Project Puts Mozambique at the Top of African CAPEX Destinations

Analysts Say Rovuma LNG Project Puts Mozambique at the Top of African CAPEX Destinations

Mozambique is consolidating its position as the main destination for capital expenditure (CAPEX) in Africa, driven by the Rovuma LNG project. This venture is set to capture 35 per cent of future oil and gas investments on the continent by 2027. The information was released by Martijn Murphy, principal analyst for North Africa at Wood Mackenzie, during a webinar, according to Further Africa.

According to Martijn Murphy’s analysis, 53 per cent of future oil and gas capital expenditure in Africa will be allocated to undeveloped gas assets, underlining the growing importance of gas commercialisation on the continent. ‘Mozambique’s Rovuma LNG project is at the epicentre of this transformation, positioning the country as an emerging leader in the African energy sector,’ he said.

The analyst believes that Mozambique stands out in the CAPEX panorama due to investors’ growing interest in projects with shorter payback periods and high returns on investment. Liquefied Natural Gas (LNG) has emerged as the main vector for the commercialisation of gas in Africa, despite the under-utilisation of LNG plants due to raw material restrictions and increasing domestic consumption. ‘With vast potential, Mozambique is at the forefront of this energy revolution,’ he added.

The analysis also points out that while countries such as Nigeria, Angola, Algeria and Egypt currently lead the way in spending on oil and gas, new players such as Namibia, Libya and Mozambique are expected to gain significant prominence by the end of the 2020s. ‘In Libya, CAPEX growth will be driven by new onshore oil projects planned for the second half of the decade,’ said Martijn Murphy, who also foresees substantial investments in Namibia following the recent successes in the Orange Basin, expecting more discoveries and accelerated project developments.

Mr Murphy also pointed out that both local companies and private equity firms are significantly increasing their spending across the African continent.

George Colleran, research analyst at Wood Mackenzie, highlighted the Algerian oil company Sonatrach as the biggest investor in Africa. ‘Sonatrach’s investment in gas is strategically planned to take advantage of high energy prices in Europe, the main export destination for Algerian gas,’ he emphasised. However, the analyst predicts that the major international oil companies will soon reassert their position as the main investors in Africa, with a particular focus on new exploration sites.

‘The future for oil majors in Africa looks promising, with deepwater projects leading future investments. Africa is expected to account for 30 per cent of TotalEnergies’ total CAPEX by 2035, with the continent making up half of Eni’s cash flow. This highlights the strategic importance of African assets in the portfolios of these global energy giants,’ he added.

The analysts argued that foreign national oil companies (NOCs) have also increased their investments in African upstream projects. ‘The China National Offshore Oil Corporation (CNOOC) has increased its spending since 2020, focussing on acquiring assets in Angola and Uganda,’ he said. George Colleran highlighted the potential for investment growth in the Middle East, mentioning the planned entry of the Abu Dhabi National Oil Company (ADNOC) into Egypt in 2024 as a possible catalyst for new investment in the region.

The analyst concluded by saying that ‘the future of oil and gas in Africa is poised for transformative growth, with significant investments directed towards undeveloped gas assets. Mozambique’s leading role alongside emerging markets and the increase in local and international investment underlines the continent’s importance in the global energy landscape. As deepwater projects and LNG commercialisation continue to attract substantial investment, Africa is on the brink of a new era of energy development and economic prosperity.’


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