Mozambique is one of the poorest countries in the world. The World Bank ranks it 204th out of 215 on per capita income (Just $900 in 2008). And, although the country's GDP growth has been impressive since peace broke out there in the early 90's, three quarters of its people live in numbing poverty on small parcels of agricultural land, while a few get rich. An old African story.
And now, Mozambique- thanks to the discovery of gas reserves off its coast that will very likely prove larger than Kuwait's- is nonetheless about to get rich- maybe even one of the richest countries in Africa. So, to a lesser extent, is Tanzania, its neighbour to the north.
A huge offshore gas discovery by Statoil- at least 142 billion cubic metres (cm) of 'gas in place'- has generated renewed interest in international companies after similar earlier finds. East Africa- also a piracy hotspot- is being described as the 'most promising' new frontier for gas today and "the gas industry's hottest real estate". The find is “fantastic,” says Tim Dodson, Statoil’s head of exploration. “Our biggest ever discovery outside Norway.”
“With gas exploration you have to find an elephant field to make it worthwhile,” says Simon Ashby-Rudd, an oil investment banker at Standard Bank. “They didn’t just find one elephant – they found a herd of them.”
The Economist Intelligence Unit says that Mozambique is at the heart of a rush for East African gas. Everybody wants a piece of the pie. Smaller companies are selling and the giants are moving in. Including Royal Dutch Shell, the Thai PTT Exploration and Indian Public sector GAIL and ONGC, who have shown an interest in bidding in the Cove Energy sale there. Petrobras and Exxon Mobil are in Tanzania, and Eni- the excited discoverer of earlier large gas reserves in the country- is in Mozambique. Anadarko has proposed building a US $25 billion LNG plant in the country- it will be worth more than twice Mozambique's GDP.
A big reason for the excitement is that East Africa is still somewhat unexplored virgin territory: Less than 500 wells have been drilled there so far, a twentieth of the number drilled in North or West Africa. Oil companies are smelling money; Morgan Stanley says that the number of wells that will be drilled between the Kenya and Mozambique coast will be double the number last year. The game will only escalate and will be complemented by the recent heightened interest in LNG as a substitute fuel for everything, including ships.
Along with the transformation of the Mozambique economy, a Tanzanian windfall and knock down advantages to nations up and down the East African coast, the Mozambique gas boom will bring into much sharper focus the world's fight against Somali piracy. Nothing- absolutely nothing- brings the Western nations to a fight faster than oil and gas. From Saudi Arabia to Iran and from Libya to Venezuela, the greed for oil has determined foreign policies and spurred military conflicts or regime change dreams. The gas fields off Mozambique will do no different.
I am not talking simply about protection of the East African fields- that is happening already, with citadels or 'lockdown facilities' in place on rigs, armed private patrol boats or naval boats (or a combination of both) and, I am willing to bet, well armed and trained personnel available round the clock. You can be sure workers on those East African rigs will be guarded much better than seamen passing through the same Somali pirate zone.
No, I am talking of something else that will happen. I suspect we will soon see, finally, some aggressive determination from the international community in the war against piracy on that coast. Some of this has been visible in recent months after the Kenyan tourist kidnappings and the universal acceptance- and about bleeping time too- of the links between Al Qaeda's franchise Al Shabaab in Somalia and the country's pirates.
Mozambique's gas will harden this determination. I predict we will soon see overwhelming force being used to protect gas fields off Mozambique and even Tanzania or Kenya to the north. The Mozambique Channel and its approaches will be controlled or guarded like Fort Knox, putting paid to recent South African fears that Somali piracy is moving south. Mozambique, Tanzania and South Africa have allied for more than a year to fight piracy with assets, logistics and Special Forces as part of “Operation Copper”; they will now see more Western navies assisting them in making the southern half of the east African coastline safe.
I am less confident in predicting that the Mozambique affair will make the Indian Ocean- or even its Western shores- safe for mariners again. You can rest assured that protection of the gas will be given priority, not the lives of seamen. Then, will a greater international armed presence South of Somalia mean- along with the existing focus on the Gulf of Aden- that pirates will be channelled eastwards away from Somalia, resulting in more attacks mid ocean or near India? Pirates have shown remarkable initiative, adaptability and resilience thus far, attacking as far away as the southern Red Sea, the Straits of Hormuz and close to the Indian coast. Will this change?
The short answer to those questions is that I simply do not know. However, I do know this- countries across the world will show far more determination in protecting energy resources than they have shown in protecting their seafarers' lives. This will continue. Meanwhile, leaders of nations- East or West- will continue to mouth the right things and make the right noises towards seamen, but nothing will really change there. Nothing substantial will actually be done, because, like Mozambique, those leaders are full of gas.