By Terrence Murray, The Financialist

Offshore Mozambique is believed to hold huge natural gas reserves, large enough to turn the country into a pivotal energy exporter.

Mozambique’s economy is poised to undergo a radical transformation with the ongoing development of the Rovuma Basin and its giant gas reserves.  US energy independent Anadarko Petroleum and its partners, the Mitsui Group and Cove Energy, estimate that the basin could contains as much as 60 trillion cubic feet of recoverable natural gas. These potential reserves could bring much-needed revenue to Mozambique’s national budget and drive growth in the east African nation.

Developers like Anadarko typically run about a 50/50 chance of drilling into oil or natural gas. However, of the 10 wells the company has drilled in its exploration block, located approximately 40 kilometers off the East African mainland, nine have been successful. “That’s a phenomenal rate,” a company spokesman said recently.

The successful drilling program bodes well for Mozambique. The Prosperidade gas field is located in the Rovuma Basin, an area straddling the Tanzanian border off Mozambique’s northern coast. The basin may ultimately turn out to be one of Africa’s most prominent gas finds. At another exploration block in the basin, Italian oil company ENI estimates it has discovered as much as 22.5 trillion cubic feet of natural gas. “This could be one of the most important natural gas fields discovered in the last 10 years,” Anadarko CEO Jim Hackett told the Financial Times.

Because Mozambique has a modest domestic gas market, Rovuma’s production will mostly be liquefied and shipped to markets in Asia and Europe. Liquefied natural gas (LNG) infrastructure may provide a secondary boost to Mozambique, creating jobs for the local population. At Credit Suisse’s 2012 Energy Summit, Bob Daniels, Anadarko’s head of worldwide exploration, said his company would continue to explore the area and plans to begin commercial production next year. ENI is also looking to build its own LNG facility in Mozambique and the company has indicated it’s ready to invest as much as $50 billion to develop and commercialize Mozambique’s gas. By comparison, Angola – one of Africa’s most prominent energy exporters – has only a single LNG terminal that is slated to export about 5.3 million tons of liquefied gas.

Undoubtedly, the gas finds will transform Mozambique’s impoverished economy. According to early estimates, the 15 percent stake Mozambique’s national oil company holds in Prosperidade, coupled with the annual taxes levied by the government, could add as much as $9.5 billion into the country’s coffers annually. In addition, bringing the project to fruition will require massive investments, including the construction of roads, ports and liquefying facilities. All the money should stimulate the local labor market and the various projects will create an estimated 6,000 mostly local jobs.  Anadarko and its partners, including ENH, Mozambique’s national oil company, will finance construction of the LNG export terminal and other key infrastructure.

Once the gas starts flowing from Prosperidade in earnest, Mozambique will face yet another challenge: How to harness the gas windfall and set the stage for further economic growth.

For more on this story go to:

http://www.thefinancialist.com/the-promise-of-prosperidade-mozambique-poised-to-become-africas-latest-energy-exporter/