In 2016, Mozambique entered into a multi-billion liquified natural gas project with French oil company, Total. The deal would see investment from about 20 international banks, with South Africa’s Standard Bank also securing a stake in the project. Touted as the largest foreign direct investment on the continent, the venture has been marred by political controversy as Islam extremist group Isis is understood to be collaborating with a local terrorist group, initiating violent acts in Mozambique where Total is based. South Africa was warned by Isis not to intervene in the conflict as the government remains mum on what steps it will take to protect the country from the potential security risk. In the mid-week webinar, BizNews’s Linda van Tilburg unpacks what this means for SA and what is happening in Mozambique with Leigh Elston, a leading Mozambican analyst on the oil, gas and mining sectors and Liesl Louw-Vaudran from the Institute for Security Studies. – Bernice Maune
By Bernice Maune
Total and its partners earmarked $14,9 billion for a gas venture set to boost Mozambique’s economy.
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Liesl Louw-Vaudran has been following the situation in the country since 2017 for the Institute of Security Studies.
She says gaining information has been tough because of a lack of access. Louw-Vaudran points to Mozambique’s low capacity in dealing with the problems it faces and an underestimation of the magnitude of the current situation. Total, however, appears to be protected from the insurgency arising in towns in the north of the country.
“A lot of these activities that take place have become completely lawless. As one report says, because the insurgents have completely taken over the town, you know, you hear of attacks on people, kidnapped people, burned down government installations, etc. So some of the routes have now become insecure,” she says.
Read also: Islamic State threat on SA’s door: Africa’s biggest investment under guard in Mozambique
“You have to use convoys. It really isn’t safe for people to move around. Of course, if you have a big investment like that, you have a lot of other infrastructure and there are lots of South African companies that might not be directly involved in the natural gas themselves. But of course, because of this big investment and the need for all kinds of secondary activities, many South African companies and others are now involved in that whole coast,” says Louw-Vaudran.
In addition, Louw-Vaudran notes that villages have been emptied of inhabitants as terrorist groups have gone on a rampage, beheading people and kidnapping women and girls.
On whether the companies involved in the Total gas deal have been briefed on the violence, Louw-Vadran says authorities have been restricting information.
“There are many issues, also the fact that the Mozambican authorities have really tried to prevent any information coming out because of the gas investments. They don’t want this to be threatened. They don’t want the companies to pull out. And for now, we haven’t seen any of the investments being cancelled or any of the companies expressing that they want to pull out. And some have withdrawn people (out of the project) now. But what officially has been said it’s because of Covid-19. From what we can see, any official sort of impact at this point on the actual investments have been announced and have been made.”
Other companies involved in the Mozambican regions like Sasol have issued a statement that they are aware of the situation, are operating normally and will pull their employees out should the violence directly threaten them.
Leigh Elston, a Mozambican analyst says SA could be impacted by plans it may have to join a gas project in the south of Mozambique. However, countries like Tanzania and other neighbouring countries could be more at risk.
“In the south of the country, there was, for example, discussions of South Africa building a pipeline or being part of a consortium of receiving gas. If there was a pipeline built from the river, the base and gas fields into South Africa, potentially connecting to an existing gas pipeline. I think the conflict now makes it look like that kind of investment in a pipeline infrastructure looks like it could be very risky because that’s obviously something that could be attacked,” stated Elston.
The Southern African Development Community (SADC) and African Union (AU) have not been vocal about the rising insurgency in Mozambique while International Relations and Cooperation Minister Naledi Pandor said in May this year there were discussions with Mozambique about Cabo Delgado, a town affected by the violence.
Meanwhile, President Cyril Ramaphosa has approved R154m to extend the deployment of 200 SANDF members until March 31 2021.
Discover more about the situation in Mozambique and watch Linda van Tilburg in discussion with Leigh Elston, a leading Mozambican analyst on the oil, gas and mining sectors and Liesl Louw-Vaudran from the Institute for Security Studies.
Register for the weekly Midweek Catchup:Â https://attendee.gotowebinar.com/register/2632221349207190800
