Friday, June 9, 2017

Mozambique natural gas

Imagem relacionadaThe Centre for Public Integrity (CPI), a Mozambican non-governmental organisation whose mission is to monitor the public administration, thinks that there is a certain level of uncertainty with regards to expectations of revenue from natural gas.The not-for-profit body is also critical of the lack of transparency in the extractive sector. “Revenue expectations for the state of about $18 billion within 30 years may well be realised, but it may also not,” the CPI says in a report published on Monday. “Everything depends on the price at which the gas will be sold.”Last week, the Italian firm Eni and its partners (Portuguese-based energy group Galp, the Japanese conglomerate Mitsui, Chinese energy giant CNPC and State-controlled ENH) finally signed off on a US$7 billion investment in a project to export natural gas from Mozambique in Area 4 of the Rovuma basin. During a ceremony in the capital Maputo, last Thursday, they also formally approved the construction of a floating liquefied natural gas (FLNG) plant with a capacity of about 3.4 million tons a year.While raising uncertainty about the management of those gas resources and the country’s exposure to price fluctuations, the CPI recognised the benefits of such projects for the country, especially in terms of job creation, making of Mozambique one of the major leading exporters of LNG in the world behind Algeria and Nigeria.

However, the CPI underscores a lack of transparency, noting that the price of the gas which British Petroleum has recently agreed to pay the Eni-led consortium is not known by the public. Moreover, the Mozambican government has indicated that the revenues will first be allocated to pay for the capital invested in the project before entering the state’s coffers as tax revenues. Of the $8 billion needed for gas extraction and liquefaction, 60 percent was sourced from a network of 15 banks with loans being rated by at least five rating agencies.The CPI is also concerned with cost management, as it is not rare to observe far higher costs than expected during the execution of an investment. This, combined with the risk of selling the natural resources at a price below the current market price, constitute significant risks for the state in its revenue management.

0 comentários:

Post a Comment