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After enduring a devastating attack by rebels linked with Islamic State, the town of Palma in Mozambique is slowly rebuilding itself. The real prize for the rebels was the $20 billion liquefied natural gas (LNG) project led by TotalEnergies SE, which came to a halt due to the conflict. However, with the assistance of neighboring countries, rebel numbers have dwindled, allowing for a sense of peace and security to return to Palma. Total has reinforced security measures at the site, hinting at a potential restart of construction. The LNG projects in Mozambique have significant implications for Europe’s energy needs, as they could produce a third of the European Union’s imports, but concerns from environmental groups persist. The region’s recovery also extends to other towns like Mocímboa da Praia and Pemba, as infrastructure and livelihoods slowly return to normalcy.
Total Revives $20 Billion African Gas Dream as Jihadist Nightmare Fades
By Matthew Hill
On the road into Palma, a Mozambican town about 15 miles south of the Tanzanian border, motorcycles crowd dusty streets lined with coconut trees. Makeshift storefronts covered with corrugated zinc roofs are stuffed with goods ranging from cellphones to cooking oil. At a roadside stall offering seafood, a hand-painted sign displays an octopus and the slogan “Never give up.”
It’s easy to understand why the fishmonger might’ve been inclined to give up. Two years ago most of Palma’s residents fled in fear as rebels linked with Islamic State rampaged through the town, killing dozens, looting shops and besieging a hotel where more than 100 people had sought refuge.
The real prize for the rebels was five miles south of town: a seaside patch of land about the size of Manhattan that’s home to a $20 billion liquefied natural gas project led by France’s TotalEnergies SE. Two years after Total arrived to predictions that the facility would make Mozambique a major gas exporter and supercharge its economy, construction abruptly stopped.
Since Mozambique appealed to Rwanda and nearby countries for help pushing back the rebels, their numbers have dwindled to fewer than 300, from more than 2,500 in 2021, according to the United Nations. Some vehicles in the area still travel in armed convoys, but attacks by the insurgents are increasingly rare.
Although Palma’s revival is far from complete, its population has rebounded to more than the 75,000 people it had before the conflict. Walls are pockmarked with bullet holes, and many buildings are black shells where shattered roof tiles crunch underfoot, but tents providing some government services have popped up. Foreign workers are trickling in, and the Amarula Hotel—the scene of a desperate escape attempt during the attack that left at least 10 people dead—has resumed its Sunday pizza nights. “Clearly, people are getting more confident,” says Victoria Kwakwa, the World Bank’s vice president for eastern and southern Africa. “There’s a general sense of peace and security.”
Total hasn’t confirmed any timeline for officially restarting construction, but it’s reinforced security at the site. Tall fences topped by razor wire are dotted with lookout towers staffed by Mozambican soldiers who get food, housing and extra pay from the company. Inside the perimeter, workers in blue overalls direct traffic along gravel roads. Bulldozers and front-end loaders are clearing the way for facilities that will process gas from fields just offshore. Jets again ferry workers to an airstrip built for the project, and an expansion to accommodate bigger planes is in the works.
Nearby, a group headed by Exxon Mobil Corp. aims to build a similar facility, which it now says could export more gas than anticipated before the attacks—despite criticism from environmental groups who say the Mozambique projects will dramatically increase the country’s greenhouse gas emissions. The two installations would augment production from a floating platform anchored just south of Palma, which dispatched its first cargo to Europe in November. Together the projects could produce up to 31 million tons of LNG annually, about a third of the European Union’s imports last year—making the region an important new source for Europe as it seeks to wean itself from Russian energy providers. Britain’s Centrica and Electricité de France SA have signed long-term deals to buy much of the output of Total’s plant.
About an hour’s drive down the coast, the port of Mocímboa da Praia—which became the de facto capital of Islamic State’s self-declared Mozambique province—is getting a face-lift. While almost every structure shows signs of the fighting, roads are being repaved, children play in the streets, and trucks carry returning families and their bundles of clothing and food. At the waterfront, workers are building a new jetty to handle shipments of construction material and equipment for the LNG operations until port facilities can be completed at the site.
With little government presence so far, Total says it will create a foundation with a $200 million endowment to accelerate development in Cabo Delgado province, a land of scrubby coastal plains, dense forests and mountains rising in the west. The French company has taken on an outsize role, offering food aid and other services as the government struggles to provide education and health care in the region, according to João Feijó, a researcher in the national capital, Maputo. “The Mozambican state is very fragile,” he says. “Total is trying to compensate.”
Some 250 miles farther south, the provincial capital, Pemba, is slowly returning to normal. Rwandan forces patrol the streets in pickups, and the population—which doubled during the fighting—is headed back to its pre-conflict level of about 200,000 as displaced people make their way back to homes farther north. Construction on upscale buildings for gas-field workers is starting again, and security industry workers in the city say they’re getting calls from clients eager to return.
Julio Sethy, a developer born in Palma, vacated his Pemba office this year to make way for Total, which asked for more space in a building it rents from him. He welcomes the return of the foreigners but cautions that the situation remains tense. Mozambique is the world’s sixth-poorest country, with 500,000 people entering the labor force annually, competing for the 25,000 formal jobs created each year, according to the World Bank. And the north has the worst poverty rates, so Sethy urges Total and the Mozambican government to focus on creating employment and opportunities for locals. “I’m very optimistic,” he says, even as he’s scaled back the lofty expectations he had a decade ago. “But we must also remember the people of Cabo Delgado deserve to be involved.”
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(Adds context on climate-change effects in 7th paragraph)
–With assistance from Borges Nhamirre.
To contact the author of this story:
Matthew Hill in Johannesburg at [email protected]
© 2023 Bloomberg L.P.
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