9 May 2014

Mozambique: Nigerian Group Preparing to Invest in Pemba Logistics

Maputo — The Nigerian group Orlean Invest is ready to begin operations in the northern Mozambican city of Pemba, as soon as the Environmental Impact Assessment (EIA) of the planned Pemba logistical base is ready, Tavares Martinho, the director of research of the National Hydrocarbon Company (ENH), told AIM during an exploratory visit to the Orlean complex at the Nigerian port of Onne.

ENH owns 50 per cent of Ports of Cabo Delgado (PCD), with the other 50 per cent held by the national port and rail company, CFM. In December l2013 the government gave PCD the lease to run port and logistics terminals in Pemba, and in Palma district. Discoveries of enormous reserves of up to 180 trillion cubic feet of natural gas have been discovered off the coast of Palma.

In Palma, an entirely new port is needed with the main aim of exporting liquefied natural gas (LNG). In Pemba, a second port will be build alongside the existing one which is currently managed by CFM. The new Pemba port will be built and managed by PCD, under a special regime designed to open up space for attracting private investment.

To implement the project in the required time frame, PCD is sub-leasing the Pemba logistical base to the newly formed company, ENHILS. This is 51 per cent owned by ENH Logistics (itself a subsidiary of ENH), and 49 per cent by Orlean Invest.

Martinho said that the Environmental Impact Assessment (EIA) is under way, and if it is completed by the end of this year, leading to the issuing of the requisite environmental licence, construction of phase one of the Pemba logistical base can begin in early 2015. “After the EIA, the project is definitive”, said Martinho.

The area concerned is adjacent to the existing port of Pemba.

Nobody is living there, aid Martinho, and so there is no question of resettlement. There is some agricultural activity, and anyone who has planted on the area will have to be compensated for lost crops or trees.

ENH wants an integrated logistical base for the oil and gas industry, based on the model of the Orlean Invest base at Onne. ENHILS, said Martimho, would operate as a “one stop shop” for all investors in hydrocarbons in the Rovuma Basin, off the coast of Cabo Delgado.

Currently, there is a proliferation of logistical bases in Cabo Delgado. Energy companies such as Anadarko of the United States and ENI of Italy are each setting up their own. But ENH wants all logistics for the hydrocarbon industry to be centralized.

Mozambique is only at an initial stage in exploiting its hydrocarbon resources, said Martinho, while Orlean Invest and its predecessors have been active in the Niger Delta for half a century. ENH had to view the partnership with Orlean Invest “as an opportunity for learning, and an attempt to do better”.

“We are learning how things are done”, said Martinho. “We are looking at the international quality standards which give credibility to ports”.

Onne port started in 1988 with a jetty that was just 300 metres long, and has expanded until today it has 5,963 metres of jetty, with a further 5,711 metres under construction. 300 metres is also the projected length of quay for the first phase of the Pemba logistical base, though there will be room for expansion at later stages.

Construction of the first phase at Pemba is budgeted at the fairly modest sum of 150 million US dollars, including the building of the logistical base itself, and of the installations for the production and assembly of the subsea equipment used in the hydrocarbon industry.

Orlean Invest is clearly providing the financial muscle, and the expertise. Orlean officials who spoke to the Mozambican journalists accompanying the EBH team made it clear that they are ready to start operations in Pemba at any time.

Orlean Invest states that Onne is the largest free zone dedicated exclusively to oil and gas anywhere in the world. It has 20,000 direct employees, and indirectly provides employment for a further 50,000. It claims an annual turnover of two billion dollars.

Orlean Invest is a holding company, with a wide range of subsidiaries. Among the most significant of these are Intels Nigeria, responsible for integrated port logistics and facilities, Prodeco (Property Development Company), which runs construction and real estate activities, WAMS Machinery and Services, and West Africa Catering (responsible for dispatching safe, good quality food and drink to all offshore oil and gas operations).

But there are snags facing ENHILS and Orlean. One is the fact that the Pemba sub-lease was awarded directly to ENHILS, without any public tender. PCD claimed this was necessary because of the tight timetable for implementing the Palma liquefied natural gas (LNG) project. The normal tender process would have taken too long. Contracting ENHILS directly would allow building work to begin in such a way as to meet the targets of the natural gas companies.

According to PCD executive director Andre da Silva, ENHILS had been chosen because of its technical capacity and guarantees of immediate financing for the construction work. These factors are clearly provided by Orlean Invest.

The Mozambican anti-corruption NGO, the Centre for Public Integrity (CIP), not only denounced the lack of a public tender, but argued that this was illegal, and that the delay in moving ahead with the Pemba base was deliberate in order to avoid a public tender, using the argument that there was no time.

In theory, this problem could still damage ENHILS, because Mozambique's Administrative Tribunal has not yet approved the Pemba sub-lease.

A further difficulty is the scandal surrounding an Orlean Invest minority shareholder, Atiku Abubakar, the former Vice-President of Nigeria, who was publicly accused by the US Senate Permanent Sub-Committee on Investigations of “using offshore companies to bring suspect funds into the United States” - in other words, money laundering. The sub-committee claimed that, from 2000 to 2008, Abubakar, via his fourth wife, Jennifer Douglas Abubakar, brought over 40 million dollars in “suspect funds” into the US.

It also claimed that Abubakar had used Orlean in his suspect activities. While this does not necessarily implicate Orlean Invest, or its majority shareholder, the Italian billionaire Gabriele Volpi, in criminal behaviour, it does cast a long shadow over the company.

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