The Mozambican government is striving to ensure the right balance between exporting raw materials and using them on the domestic market in a way that is socially viable and economically sustainable, declared President Armando Guebuza on 25 July.

The President was speaking at the opening session of a conference in the Scottish city of Aberdeen on "Infrastructure Development in the Emerging Oil and Gas Industry in Mozambique".

President Guebuza said the government "is actively pursuing a vision to make our natural resources a driving force of sustainable social transformation and industrialisation through value addition within the country, with the ever increasing participation of Mozambicans".

The policies in place, he added, are "aimed at providing an appropriate, transparent and secure environment".

In particular, the Gas Master Plan, approved by the government in 2012, "provides for the development of natural gas resources in a manner that stimulates investment to maximise benefits for our people, and plays a role in our drive to make poverty history in Mozambique".

That plan supports "growth in domestic public and private sector institutional skills, growth in domestic industry and businesses, especially small and medium enterprises, increased employment across the country, and expanded access to training and education".

One of the major challenges, President Guebuza continued, "is the building of human and institutional capacities to deal with this complex and strategic industry. The growing natural resource business requires training in order to provide the country with skilled labour which is adequately qualified to meet the demand of the whole hydrocarbon value chain".

President Guebuza stressed that Mozambicans "should not lose sight of the other sectors of our economy that have been the engines of our average growth rate of seven per cent a year for more than a decade now. These remain vital and priority areas in our development strategy".

"Optimal recovery" targeted

According to the chairperson of the National Petroleum Institute (INP), Arsenio Mabote, the government is aiming for "optimal resource recovery of all hydrocarbon resources".

Speaking during the conference, Mabote said that policy fundamentals included "securing resource rent, allowing industrial development, and retaining an efficient petroleum regulatory and administrative regime".

He pointed out that there are two main sedimentary basins in Mozambique, where hydrocarbon deposits could be found. The better known of these is the Rovuma Basin in the far north of the country, covering 17,000 square kilometres onshore and 12,500 square kilometres offshore.

It is in the offshore region that the recent spectacular discoveries of gas have been made by consortia headed by the American company Anadarko, and ENI of Italy. Mabote pointed out that the wells drilled so far have made ten discoveries, within a radius of about 50 kilometres.

The Mozambique Basin is much larger, covering half a million square kilometres of the central and southern Mozambican coastal plan and continental shelf, stretching from the Zambezi Delta to the border with South Africa. It was here that the country's first gas fields were discovered, in the 1960s, at Pande and Temane in Inhambane province. But exploitation of these resources, by the South African petro-chemical giant Sasol, only began in 2004.

The known reserves at Pande and Temane are 3.5 trillion cubic feet of gas, dwarfed by the 185 trillion cubic feet so far discovered in the Rovuma basin. The Mozambique Basin remains largely unexplored.

The immediate tasks for the Rovuma basin, said Mabote, are to build the facilities for producing liquefied natural gas (LNG), drill the development wells, install subsea architecture, and secure shipping agreements.

He pointed out that Anadarko and ENI will have to reach agreement on sharing gas reserves - the discoveries the two consortia have made are probably interconnected.

Mabote said that further offshore seismic data, for both the Rovuma and the Mozambique basins, is being acquired, to be used as the basis for forthcoming licensing rounds.

The challenges facing the government, he added, include the local processing of natural gas for industrial products, guaranteeing competitive prices for natural gas on the local market, the training and employment of Mozambican staff in gas related industries, and ensuring local content in the provision of goods and services.

The chairperson of the National Hydrocarbons Company (ENH), Nelson Ocuane, pointed out that the hydrocarbon potential of all of east Africa is underdeveloped, with less than 600 exploratory wells drilled (94 of them in Mozambique). This compares with 19,000 exploratory wells in north Africa and 14,600 in west Africa.

Ocuane pointed to the potential use of natural gas to produce fertilisers. Mozambican farmers currently use very small amounts of fertiliser - an average of only 3kg per hectare, which compares with a 10.5kg average in sub-Saharan Africa, and the world figure of 122kg per hectare.