* Draft plan estimates $6-8 bln boost to government revenue
* Govt keen on developing local gas industry beyond LNG
* Firms propose GTL, power generation, fertiliser plants
By Agnieszka Flak
JOHANNESBURG, Dec 14 Mozambique plans to take
advantage of massive gas reserves to develop domestic industries
as well as export liquefied natural gas, boosting government
revenue by $6-$8 billion a year, the latest draft of its master
Some 150 trillion cubic feet of gas have been found off its
shores so far, enough to supply Germany, Britain, France and
Italy for 15 years, and the government and companies scouting
wells have estimated there may be potential to double that
Oil majors including Italy's Eni and the U.S.'s
Anadarko Petroleum are pushing for the development of
LNG plants first as the quickest way to pay off investments in
But while exports will be prioritised and production deals
are expected to be signed next year, the government hopes other
downstream developments will come soon after.
"We want more than just LNG. We have huge reserves and we
want to see how we can use the gas in the local, regional and
international market," Minerals Minister Esperanca Bias said.
Mozambique hopes the gas will become a game-changer for a
country where more than half live below the national poverty
line of around $0.65 a day and 60 percent have no formal job.
A net importer of fuel, Mozambique hopes to use gas to
manufacture liquid fuels. It also aims to produce cheap
electricity to help supply the four-fifths of its 23 million
people who still have no access to power.
The $6 billion to $8 billion estimate compares with a World
Bank figure of $12.8 billion for gross domestic product in 2011.
Companies from South Africa, Germany, Japan, India and South
Korea among others have expressed interest in setting up
gas-to-liquids, methanol or fertiliser plants or in processing
gas for power generation or production of steel and aluminium.
If all the projects were realised, they would require 2.4
bcf of gas per day or capacity equal to three LNG trains -
facilities that turn natural gas into liquid - the draft plan
"That's a significant amount and really raises the question
of how the government will balance an export-focused development
approach with the domestic off-take," said Anne Fruhauf,
director for Africa energy at consulting firm Horizon Client
SOVEREIGN WEALTH FUND
The plan estimated there was enough gas in Rovuma to feed 10
LNG trains and other major gas-based projects starting in 2018.
In addition, the area around Mozambique's Moatize basin in
the north-central Tete province may contain significant
resources of coal bed methane, which is gas trapped in
underground coal seams.
Anadarko said it would be interested in selling gas into the
domestic market after it matures to a point that gas prices are
competitive, while Eni mentioned plans to build a power plant in
For now, local development plans are vague and depend on
investors' access to capital, future gas prices and development
of domestic transportation and distribution infrastructure.
The plan analysed four coastal locations for the development
of a gas hub: one in Palma, close to Tanzania's border and near
the discoveries made by Anadarko and Eni, and three others in
Pemba, Nacala or Beira further south.
While the LNG plants are likely to be built at Palma, the
state is keen to distribute the benefits of the gas riches to
other parts of the country and build industrial hubs based on
One major challenge will be transporting the gas from the
far north over its 2,500 km (1,550 miles) coastline - Africa's
longest - to the capital Maputo in the far south.
Mozambique is now finalising the master plan, which will
feed into a more concrete document that will rank individual
projects according to their feasibility and economic boost.
Each location and individual project will be evaluated based
on its economic viability, contribution to jobs, other social
development, state revenues and on environmental grounds, a
senior government official said.
Mozambique plans to create a sovereign wealth fund or a
national development bank to channel future gas revenues into
industrial and social development.