Natural Gas, Mozambique, and its Suitors

Today, the Frelimo party of Mozambique faces its first true test to hold power since 1975. Mozambique’s other major political party, Remano, has mounted a vigorous campaign to take power in the southeast African country, which has made the race too close to call. Reports out of the African country claims voting has started off peacefully, a good sign that a power transition may be peaceful, should it happen. What has garnered the attention of the African country is not the election, but what will happen to one of the world’s largest gas and coal reserves that were recently discovered in the country.

China has already taken advantage of this discovery, purchasing a 20% stake in the giant offshore natural gas field. The China National Petroleum Company paid $4.21 billion to Italian oil producer Eni SpA for this stake and also 28.6% stake of Eni East Africa. The purchase field in question, named “Area 4” is rumored to possess 75 trillion cubic feet of gas, while “Area 1” is said to hold 90 trillion cubic feet of gas. This makes it the largest deep-water gas discovery. It is no surprise that Mozambique has all of a sudden become a focus on the African continent. Russia has even sought to deepen its relationship and cooperation with Mozambique, a statement made by Russian Foreign Minister Sergei Lavrov after meeting with his counterpart Oldemiro Baloi in April of 2014. Such a decision should be of no surprise given this discovery.

As China continues to increase its influence and presence on the African continent, once again the United States remains mute on its initiatives for greater influence and investment. On August 4, 2014, Mozambique President Armando Guebuza, speaking in Washington D.C., asked for more American businesses to invest in the country, stating there is great potential to invest. So it must be asked: What is the United States’ plan to compete for influence in Mozambique?