Mozambique and Zambia Forge Landmark $1.5 Billion Gas Pipeline Deal

Mozambique has signed a US$1.5 billion gas pipeline deal with Zambia, aiming to enhance energy transport. With a capacity of 3.5 million metric tons, it hopes to ease road congestion. The pipeline agreement was made at the Mozambique Mining and Energy Conference. Additionally, a new modular fuel refinery project will further support Mozambique’s growing energy sector, aiming for completion in 24 months. Major companies are set to resume significant LNG projects in the country.

Mozambique has recently struck a significant deal with Zambia for a US$1.5 billion gas pipeline, marking another step in the country’s burgeoning energy infrastructure development. Announced by President Daniel Chapo, this cooperation agreement was signed Wednesday during the opening of the 11th Mozambique Mining and Energy Conference. The pipeline, intended to run over 1,000 kilometers from the coastal city of Beira to Ndola in Zambia, is set to have an annual transport capacity of 3.5 million metric tons, which is expected to ease road traffic along the vital Beira Corridor.

While the project aims to transform energy transport in the region, the specifics on how the pipeline will be financed remain somewhat vague. President Chapo indicated that the commissioning should hopefully occur within four years. Mozambique’s extractive sector is gaining momentum, with mining activity up 12 percent year-on-year, bolstered by over 117 shipments from the Coral Sul floating liquefied natural gas (FLNG) platform operated by Eni, the Italian energy giant.

Additionally, President Chapo unveiled another exciting initiative—a joint venture set to build a modular fuel refinery. This project, involving the state-owned fuel company Petromoc and Aiteo Eastern E & P Group, is expected to be completed within two years. The refinery will handle up to 200,000 barrels of liquid fuel daily, with significant storage capacity for various fuel types, including LPG. Chapo praised this endeavor as a “transformative” move that would enhance Mozambique’s role in the liquid fuel value chain and contribute positively to job creation.

Furthermore, the country’s status as a strategic supplier of liquefied natural gas has been reinforced by the recent approval of a second FLNG platform in the Rovuma Basin and progress on two long-stalled LNG megaprojects. TotalEnergies recently mentioned that work on its US$20 billion onshore LNG project would soon resume, following a hiatus since 2021 due to security concerns after a violent insurgent attack in Cabo Delgado.

Despite ongoing instability in the region, TotalEnergies CEO Patrick Pouyanné expressed his optimism, stating, “The aim is to restart [the project] by mid-2025.” In parallel, US-based ExxonMobil is also working to reevaluate its involvement in Mozambique, contracting Italian firm Bonatti to refurbish its base on the Afungi Peninsula, which is a crucial part of the US$27 billion LNG project. This location is key for providing necessary accommodations and operational support for further LNG development efforts.

Mozambique’s latest initiatives, particularly the US$1.5 billion gas pipeline to Zambia and the new modular fuel refinery, underscore its commitment to enhancing energy infrastructure. Amidst challenges, the extractive sector is growing, promising job creation and positioning the country as a significant player in both liquid and natural gas markets. With major companies like TotalEnergies and ExxonMobil preparing to reinvest, Mozambique is cautiously optimistic about its energy future.

Original Source: macaonews.org