The development of Mozambique’s gas resources in the Rovuma Basin has created immense opportunities for the country’s economic growth. With the recent Final Investment Decision (FID) for Area 1 and the anticipated FID for Area 4, it is evident that a robust value chain will be crucial to support gas development in Mozambique. The focus now shifts to the type of ecosystem that will be established and how it will shape the future of the industry. Emulating Qatar’s Ras Laffan gas complex, Mozambique aims to create a similar value chain. With an estimated US$5 billion of local content opportunities from the first two onshore projects alone, the commitment to local participation is evident. Standard Bank’s Eardley-Taylor emphasized the importance of creating a Qatari-style value chain and leveraging the potential of local resources.

According to Chivambo Mamadhusen, CEO of Grupo Videre, the involvement of local companies has already been recognized in the preliminary stages of the project. Area 1, for example, has awarded contracts to Mozambican companies for aggregates and logistics, and a significant portion of employment opportunities has been provided to Mozambican workers. The COVID-19 pandemic highlighted the value of relying on local suppliers for essential services during times of international logistic disruptions.

However, the pandemic and market weaknesses have led to challenges and business casualties. Local companies have faced contract losses, but industry insiders believe this is not due to a lack of commitment. Instead, stakeholders suggest that the government should focus on creating a conducive environment for local players to thrive. This includes addressing issues such as high interest rates on financing, which hinder the competitiveness of local companies compared to international counterparts. While the development of Area 1 has progressed despite the pandemic, there are expectations of reduced profitability for suppliers due to repricing. Mamadhusen noted that many service providers are renegotiating contracts, impacting profit margins. 

Opportunities abound for experienced service companies from abroad to collaborate with Mozambican partners and share industry expertise. Proximity and trade ties make South Africa a potential beneficiary, but given cultural ties and oil and gas know-how, Angola appears well-suited to assist in the development of the service sector in northern Mozambique. Angolan maritime services company Octomar, through its Mozambican subsidiary M-Octo, has demonstrated a proactive approach to expanding its presence in Mozambique. The company has partnered with a local Mozambican firm and is preparing to participate in upcoming oil and gas tenders. Octomar aims to replicate its successful Angolan business model in Mozambique, seeing it as a key area for growth.

Foreign service companies can also rely on the support of Mozambique’s banking system, which is eager to be involved in the region’s most promising development. Standard Bank, for example, encourages global companies with LNG project experience to consider moving to Mozambique. The bank sees enormous potential in establishing a large industrial complex in northeastern Mozambique, akin to Qatar’s Ras Laffan.

As Africa and the oil and gas industry strive to recover from the COVID-19 impact, the progress made in Mozambique’s LNG project offers hope and serves as a beacon for the future. Establishing a robust and sustainable value chain is vital for the long-term success of gas development in Mozambique. The commitment to local content and the involvement of both local and international players are key factors in creating a thriving ecosystem. By addressing challenges, fostering collaboration, and leveraging expertise, Mozambique has the potential to become a significant player in the global LNG market while driving economic growth and development within its borders.