Mozambique's U.S.$20 Billion Gas Project - a Boom That Heralds a Resource Curse Bust?


Africa has a new petro-state, or gas-state. US energy firm Anadarko Petroleum this week gave the green light for the construction of a $20bn gas liquefaction and export terminal in Mozambique. The boom could double Mozambique's GDP. But the shining examples of Angola, Nigeria and Equatorial Guinea suggest that this hydrocarbon windfall could have catastrophic consequences for the country.

If ever there was a candidate ripe for falling under the spell of the "resource curse", it would be Mozambique. It is in the process of becoming bewitched thanks to the $20-billion gas investment announced this week by Anadarko, which in turn is being taken over by Occidental Petroleum Corp. When that deal is done, Occidental has agreed to sell assets including the Mozambique LNG project to French oil major Total SA.

Broadly, the resource curse refers to the inability of resource-rich developing nations, notably in Africa, to translate their natural wealth into wider prosperity. Indeed, they are often beset by conflict, corruption, iron-fisted rule and a distressing failure to meaningfully diversify their economies. As long as the oil or mineral revenues keep flowing in their opaque streams to the government, which typically squanders or simply loots them, the ruling party...

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