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Oxford Economics: New Cabo Delgado Attacks Raise Doubts for LNG Investors

Oxford Economics: New Cabo Delgado Attacks Raise Doubts for LNG Investors

Oxford Economics consultancy said on Monday that the recent attack in northern Mozambique “creates doubts” in the minds of decision-makers for major natural gas investments, on which this African country depends to relaunch economic development.

“The attack on Macomia will create doubts in the minds of decision-makers at TotalEnergies and ExxonMobil who, together with partner Eni, should very soon make a final investment decision on another project,” reads a commentary on the latest attacks in northern Mozambique, an area that is home to vast natural gas reserves.

“The developments have also caused consternation in Maputo,” the analysts add in the commentary sent to investors, to which Lusa has had access.

They point out that Mozambique’s sovereign wealth fund has already received ” US$94.2 million (€87.2 million) in revenues from gas and oil exploration, with US$20 million (€18.5 million) of the total being raised in the first quarter of this year alone”.

The government, they conclude, “is desperate to convince investors to go ahead with the announced projects and knows that further postponements will only further delay the promised development of gas exploration”.

On Friday, the Mozambican ministry of national defence confirmed a “terrorist attack” in the early hours of the morning on the village of Macomia, guaranteeing that one of the group’s leaders was wounded by the armed forces and another killed.

“The attack lasted around 45 minutes and the terrorists were promptly repelled by the coordinated action of our forces, which forced the enemy to retreat towards the interior of the Mucojo administrative post,” reads a statement from the ministry of National Defence.

The President of Mozambique, Filipe Nyusi, had already confirmed this attack on the Macomia district headquarters late on Friday morning, explaining that it took place in an area previously controlled by the military of the southern African countries’ mission, which is gradually withdrawing until July.

“It’s true that it’s an area occupied by our brothers who support us, who are withdrawing. But those on the ground are 100% Mozambicans. Perhaps there could be a reinforcement (…). As they’re leaving. I hope we can organise ourselves better, because the time of transition gives us that,” he acknowledged, praising the ongoing intervention by the Mozambican military.

The town of Macomia is located on the National Road 1 (N1), which connects to the districts further north, such as Muidumbe, Nangade, Mueda, Mocímboa da Praia and Palma, so this attack also interrupts communication by land to the five districts.

Cabo Delgado province has been facing an armed rebellion since October 2017, with attacks claimed by movements associated with the extremist group Islamic State, which led TotalEnergies to suspend the project to build a liquefied natural gas plant in 2021.

In February, the president of the French oil company said he foresaw a return later this year, but conditioned the resumption of work on the guarantee of security, warning that if work had to stop again, the project would probably be abandoned.

Mozambique has three development projects approved to exploit the natural gas reserves in the Rovuma basin, classified as one of the largest in the world, off the coast of Cabo Delgado.

Two of these projects, TotalEnergies’ and ExxonMobil’s, are larger and involve channelling the gas from the seabed to land, cooling it in a plant to export it by sea in a liquid state. 

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