Mozambique’s $80 billion energy transition strategy is set to revolutionize the country’s energy landscape. President Filipe Nyusi recently spoke at the United Nations Climate Change Conference (COP28) and announced plans to harness Mozambique’s diverse energy resources, including offshore natural gas, hydroelectric power, wind, and solar energy. This strategy marks a significant milestone for Mozambique’s energy future, positioning it as a key player in the global shift towards renewable energy.
One of the major developments in Mozambique’s energy transition is the $5 billion Mphanda Nkuwa hydropower project, which will be built in partnership with French power giant Électricité de France (EDF), energy company TotalEnergies, and the Sumitomo Corporation. This project, situated across the Zambezi River, will tap into the country’s abundant hydroelectric resources, providing a sustainable and reliable source of electricity.
TotalEnergies, in addition to its involvement in the hydropower project, is also resuming its $23 billion Mozambique liquefied natural gas (LNG) project. This mega-project, Africa’s largest foreign direct investment, was temporarily halted due to security concerns after an attack by an insurgent group linked to the Islamic State. However, TotalEnergies is now preparing to resume operations in early 2024, with commercial operations expected to commence in 2028. This project will not only create thousands of jobs but also generate significant revenue for the Mozambican government.
The resumption of TotalEnergies’ LNG project is crucial not only for Mozambique but also for the energy industry as a whole. Mozambique’s gas reserves have gained strategic importance, especially in light of the Russian invasion of Ukraine, as Europe seeks to diversify its energy supplies. The LNG production from TotalEnergies, as well as Exxon and ENI, could potentially supply a third of the European Union’s imports in 2022.
However, the journey towards achieving Mozambique’s energy transition goals is not without its challenges. Delays in the LNG project have prompted some investors to reassess cost assumptions, considering inflation and fluctuations in the global gas market. Furthermore, the cancellation of a 20-year contract by Indonesian company Pertamina to purchase LNG from the Mozambique project adds another setback. Nevertheless, other offtake agreements remain in place, with Japan, the United Kingdom, Indonesia, and French energy company EDF still committed to purchasing Mozambique’s liquefied natural gas.
To secure predictable funding and increase investor confidence, Mozambique has sought partnerships with various countries and international organizations. The UK has invested $1.15 billion through UK Export Finance, and the Mozambican government has engaged in discussions with the European Union and other stakeholders. These efforts demonstrate Mozambique’s commitment to achieving its energy transition goals and generating sustainable economic growth.
In conclusion, Mozambique’s energy transition strategy is poised to transform the country’s energy sector by tapping into its diverse energy resources. The hydropower and LNG projects, in partnership with global energy companies, will not only provide clean and reliable sources of energy but also contribute to job creation and economic development. Despite challenges, Mozambique’s commitment to its energy transition is evident through its partnerships and engagement with international stakeholders. By embracing renewable energy and developing its vast energy potential, Mozambique is positioning itself as a leader in the global shift towards a sustainable future.