The messy reconfiguration of energy supply chains following Europe’s severance from Russia continues, and it has the West pushing ahead at all costs – even funding much of fighting in a resource-rich region of Mozambique.
France’s Totalenergies is moving forward with efforts to get a Mozambique LNG project back on track despite serious concerns over violence and human rights abuses in the region. The project was mothballed back in early 2021 due to violence, but is now expected to restart this summer.
Mozambique’s natural gas reserves are the third largest in Africa after Algeria and Nigeria, and if all the deposits are tapped, the country could become one of the world’s ten biggest gas exporters. Much of the reserves were discovered in the Muslim-majority northern province of Cabo Delgado back in 2010.
Massive amounts of money began pouring into the region, the government prioritized the interests of foreign investors, and private security and a local insurgency began fighting. While the conflict in the region is blamed on “terrorists,” the reality is more complicated. From Friends of the Earth:
The Mozambique government is promoting a narrative of ‘foreign Islamic terrorists’ disrupting the LNG projects, but this doesn’t represent the reality of the situation, nor reflect the role that the LNG projects have had in drawing those eager to cash in, and fuelling violence in an impoverished region of a country which is both one of the poorest in the world, and still recovering from a bloody civil war. Since 2017 thousands of civilians have been killed, and almost 700,000 have been forced to flee – being chased from their homes with very few possessions.
Beyond the conflict, 550 families were directly displaced via corporate land grabs, and the blocking of access to fishing grounds, to make way for the infrastructure required for the LNG projects. Promises from the LNG industry of new land and jobs have not been met, and displaced families now struggle to make a living without their traditional livelihoods.
Thus far, Mozambique and its international backers in the West have failed even to recognise the grievances of the insurgents, which goes far beyond And Responsible Statecraft:
According to displaced Mozambicans, the insurgency today was born out of anger over government corruption, poverty, and poor economic policies. In 2013, three Mozambican state-owned companies secretly borrowed $2 billion from international banks, but the loans were contracted without parliamentary approval plunging the 8th poorest country in the world into a financial crisis yet to be recovered from. This did little to help the 46 percent of Mozambique’s population, especially those in the north, who live below the poverty line.
While Cabo Delgado is resource rich with vast mineral and gas deposits, local Muslim ethnic groups, namely the Mwani and Makua who make up the core of [Ahlu Sunna Wa-Jamo], are excluded from the benefits; including those of French Total’s, a European multinational energy and petroleum company, $20 billion Liquified Natural Gas (LNG) project off the northern coast. The state’s inability to address these social, religious, and political dynamics served as ASWJ’s tipping point into armed action.
TotalEnergies halted its $20 billion LNG project, which is partially financed by the US government, in 2021 due to the violence. In 2020, the US Export-Import Bank approved a $4.7 billion loan for the LNG facility. The Exim statement said that the loan would support 16,700 US jobs and keep China out of the gas field.
Soon after Total was forced to halt the project, French President Emmanuel Macron rushed off to Rwanda, offering the country millions in loans. Macron announced an additional €370 million to finance various development projects in Rwanda. For example, earlier this year the French Development Agency loaned the country 37 million euros in large part to construct a drone operations center.
Shortly after Macron’s visit and his pledging of more money, Rwandan forces were deployed to northern Mozambique in July of 2021.
Through the European Peace Facility mechanism, the EU is funding the deployment of Rwanda Defence Forces in Cabo Delgado in order to fight “terrorism.” Mozambique is also receiving EU funds to secure the area for Total. There are currently around 2,500 Rwandan troops in Cabo Delgado, engaged in joint operations with the Mozambican army.
EU funding of the Rwandan military continues despite the thousands of deaths in Mozambique and displacement of roughly one million people. The Rwandan military also (allegedly) supports militant groups that are constantly pillaging the resource-rich Democratic Republic of Congo (DRC). The US also supports and trains the Rwandan military as it’s trying to increase control of resources in the region and box out China.
Much the same way the US uses Rwanda for proxy forces in the DRC, the EU is using Rwandan forces in Mozambique. And so with the financial support of the EU and help from Rwanda, Mozambique has been able to quell much of the insurgency in Cabo Delgado through massive displacement, but sporadic violence continues.
As Total faced problems getting its LNG operation up and running, the description of the insurgency changed from a battle over economic grievances to one of international Islamic terrorism. The US entered the fray, sending Green Berets to Mozambique to “prevent the spread of terrorism and violent extremism.” It also conveniently provided a cover for the US and France, who have important economic interests in Cabo Delgado and want to keep Russia and China out of the region.
Beijing has a longstanding relationship with Maputo, the Mozambican capital, which features a recently refurbished airport and Africa’s longest suspension bridge, both courtesy of Chinese companies. China is also Mozambique’s third-largest source of imports and second largest export destination.
Last year the Chinese National Offshore Oil Company was awarded five exploration blocks in the most recent Mozambique licensing round. The China National Petroleum Corporation has 20 percent of area 4 off the coast of Cabo Delgado, where LNG shipments from a floating platform began late last year. The two main owners of area 4 are the Italian energy company Eni and ExxonMobil with 25 percent each.
Mozambique is important source of timber, titanium, sand processing as well as other resources, for China. Beijing also uses Mozambique as an entry-exit point for landlocked and resource countries Zimbabwe and Zambia.
China has also been increasing its footprint in Mozambique by buying stakes in Portuguese companies. From Dr Joseph Hanlon, a visiting Senior Research Fellow in the Department of International Development at the London School of Economics who has been writing about Mozambique for 40 years:
China has become the fourth largest foreign investor in Portugal. The state-owned China Communications Construction Company (CCCC) recently took a controlling interest in Mota-Engel, the largest Portuguese construction company which also is largest in Mozambique. It is involved in construction relating to the Cabo Delgado LNG production facility, mining, and Maputo apartment blocks. Most recently it has been involved in constructing wharf and unloading facilities in Palma and Afungi.
The Fosum group is the biggest shareholder in Portugal’s largest bank, Millennium bcp, with 29.95%; Millennium bcp owns 66.7% of Millennium bim, the largest bank in Mozambique. China Three Gorges (CTG) is the largest shareholder in EDP Energias de Portugal with 20.22%. EDP is a leader in renewable energy and has projects in Mozambique.
Mozambican government officials regularly praise Chinese aid and investment, as Beijing is the country’s largest bilateral creditor at $2.2 billion. Every president since Mozambican independence in 1975 has made multiple trips to China, and it has also hosted every Chinese president and almost every premier for official state visits over the same time period.
Beyond the natural gas, the US is also interested in using Mozambique to bypass China in the control of critical minerals, in this case graphite, for the green energy transition.
Mozambique was one of five African countries invited to the US Minerals Security Partnership on the sidelines of last year’s UN General Assembly. At the meeting Secretary of State Anthony Blinken mentioned the importance of a mine in Cabo Delgado from which graphite will be sent to Louisiana for processing. More from allAfrica:
The US Department of Energy (DoE) in an 18 April statement said “today the United States is 100% reliant on imported graphite as China produces nearly all of the high-purity graphite needed to make lithium-ion batteries.”
The DoE is providing $107 mn loan to the Australian owners of Balama, Syrah Resources, to build a processing factory in Vidalia, Louisiana, to produce graphite-based anodes for lithium-ion batteries. The DoE said the plant would create “98 good-paying, highly skilled operations jobs within the clean energy sector.”
Yet again, Mozambique gets nothing but a hole in the ground, while the manufacturing is in the US.
The Total LNG project is now set to be restarted in July. The company’s chief executive Patrick Pouyanne took a road trip around Cabo Delgado province last month, and said the security situation has improved “significantly” since Total had to close up shop in 2021. Pouyanne also commissioned an “independent fact-finding mission” to assess the human rights situation, which will presumably give the green light for work to resume.
It will be the first onshore LNG plant in Mozambique. In November, the first LNG exports from the area left Mozambique for Europe, but it was produced at Coral Sul, a floating facility managed by the Italian company Eni.
The Total project off the northern coast contains approximately 65 trillion cubic feet of recoverable natural gas, and the company plans to expand up to 43 million tonnes per year. According to the International Gas Union’s World LNG Report, Mozambique will be one of the biggest beneficiaries from additional LNG capacity between 2022-2026 after Russia (although the status of upcoming projects is uncertain amid the Ukraine conflict), Qatar, and the US.
Eni, the major Italian energy company, shipped its first cargo from the Coral South field in November. Eni has said Coral-Sul is the first of three FLNG projects planned in Mozambique.
Eni was still receiving around 80 percent of its supply from Russia before the EU ended that arrangement last year. The company is now planning on receiving zero Russian gas moving forward and is aiming to replace 80 percent of the gas it received from Russia before next winter.
Of course it is having to spend a lot more in order to accomplish that. From Natural Gas Intelligence:
Eni is aiming to fully replace the gas it previously received from Russia with 20 billion cubic meters (Bcm) of additional annual supply from imports and equity production projects by 2025. It assumes 9 Bcm will be supplied by pipeline and 11 Bcm will come from growing its integrated LNG portfolio.
Eni upgraded its guidance for capital expenditures over the next four years by 15%. It now expects to spend around $39 billion as it seeks to progress production and energy transition projects.
Even if US and EU backing help Rwandan and Mozambican forces completely clear Cabo Delgado so the LNG projects can hum along uninterrupted, it will still be a drop in the bucket of the effort to replace Russian gas. According to GIS, the entire African continent’s proven gas reserves are equivalent to 34 percent of Russian resources. In 2020, total gas trade between Europe and Russia was nearly 185 bcm. Mozambique might be able to hit 14 bcm by 2025 if everything breaks right.