He emphasised that the time is ripe to expand the investment into the country’s gas and energy industry.

“We know that developing the gas fields in northern Mozambique requires substantial external capital which relies on contracted export of the Liquified Natural Gas (LNG) to established customers for bankability,” says Webb.

However, the expected c. $100bn investment will result in substantial improvements in road, port, water and electricity infrastructure in the region, which needs to be leveraged to the benefit of all residents.

“In addition, Government needs to coordinate the plan for social infrastructure and human capital development in addition to ongoing industrial development in the region. Concurrently, secondary industries such as fertiliser production would be ideal to develop as they require cost effective gas to be competitive and have a major developmental impact,” he adds.

Webb says, “Mozambique should lever regional users of gas to help create economies of scale for local use as well. The substantial capital investment in gas in pipeline, liquefaction, shipping and re-gasification infrastructure require economies of scale to be viable for all users.”

Ducla Dos Santos, Acting Head of Resources at FNB Mozambique says: ” While the demand for gas locally may be limited initially, economies of scale can be achieved through taking advantage of existing pipeline networks to provide to pent-up gas demand in the region. To be successful, there will also need to be investment in distribution networks and conversion from other sources of energy”.

The focus on gas is an important one at this time. Gas is an ideal source of reliable energy for balancing regional renewable energy networks which can similarly benefit the Mozambican economy. Mozambique provides substantial hydro power into the mix (Cahora Basa and in future Mpanda Nkuwa) which enabled the aluminum industry historically, while the Southern African Power pool is dominated by coal power (Eskom)..

The renewable energy industry is growing rapidly, and medium and high power gas production is needed to stabilize it. Gas-fired power is important to balance the local and regional power grid, and Mozambique can rely on local gas to provide this service, which requires sufficient scale and bankability to make the investment worthwhile.

Gas may be the key ingredient for Mozambique to achieve its energy transition goals. Webb says, "Gas-fired power generation technologies are very flexible and can be started up quickly - which makes them ideal for balancing variable power generation from renewable solar and wind. As such, gas-fired power generation can form a powerful enabler of the renewable energy transition. In addition, gas (particularly LNG) as a fuel, results in a cleaner burn - much cleaner than coal or diesel. On the other hand, it is much more efficient, which means generation of more electricity and lower levels in carbon dioxide emissions. In a 'closed-loop' format, gas turbines can be even more efficient as a base-load power source replacing coal-fired power."

Ultimately, the successful investment into and growth of the gas market in Mozambique requires targeted investment and a bank that takes the nuances of the country, context and development goals into account. RMB, in partnership with FNB, is proud to have worked on similar transactions in the region, and, along with our trusted local partners, is able to provide ongoing insight and deals structured according to the needs our clients and the industry’s wider needs.