Mozambique is about to take a significant step forward in the gas industry, with the construction of a second floating platform for the extraction of liquefied gas in the Rovuma Basin. An agreement signed between Samsung Heavy Industries, from South Korea, and the Mozambican government during President Filipe Nyusi’s visit to the country, was announced by the newspaper O País on Monday, June 3.

The meeting between Filipe Nyusi and the vice-president of Samsung Heavy Industries, Young Kyu Han, resulted in the decision to build the second floating liquefied gas exploration platform, following the success of the first platform already installed in Cabo Delgado.

The new platform, built in collaboration with Technique of France and JDC of Japan, will have an annual production capacity of 3.4 million metric tons. However, the start of construction is subject to approval of the development plans by the Mozambican government.

The vice-president of Samsung Heavy Industries expressed his expectations regarding the approval of the development plans, indicating that, if approved this semester, construction of the platform could begin as early as the third quarter of 2024.

In addition to the construction of the platform, other possibilities for cooperation between Samsung and Mozambique were discussed, with a focus on heavy industry. Samsung, a renowned company in shipbuilding and floating platforms, has shown interest in expanding its presence in the country.

The meeting between President Nyusi and representatives of DAEWO, also involved in the gas exploration project, and Kogas, a partner company in Area 4 of the Rovuma basin, demonstrates Mozambique’s ongoing commitment to promoting investment and development in the energy sector.

The Chairwoman of the Board of Directors of South Korean oil company Kogas, Yeon-Hye Choi, expressed her commitment to continue investing in the liquefied natural gas (LNG) exploration and production project underway in Area 4 of the Rovuma basin, in Cabo Delgado province, northern Mozambique.

Speaking after a meeting with the head of state, Filipe Nyusi, in Seoul, the capital of South Korea, she said that the region where the project is located is stable in terms of security, adding that they had a “very fruitful” interaction, during which both parties shared a great vision for the future.

The Deputy Minister for Mineral Resources and Energy, António Saíde, who also took part in the meeting, explained that the parties assessed the progress of the projects in Area 4 and conveyed very clearly what had been done in the area of security in the region where Kogas is a partner.

“Kogas said it was confident in the Mozambican market because it can contribute to energy stability worldwide, which is why they are going to continue with this natural gas project,” he said.

The official said that the parties also discussed the development of the piped natural gas distribution project in the cities of Matola and Maputo and, in this context, reiterated their commitment to continue working with the National Hydrocarbons Company (ENH).

“What was planned for domestic plumbing was around 500 connections, but around 350 have already been made, and we want to believe that the rest can be made in the near future,” he said.

In terms of large consumers, Saíde mentioned the existence of 30 industries connected to the natural gas distribution network, stressing that “the government has introduced a new paradigm for the use of piped natural gas, which consists of providing natural gas in the design of future infrastructures and cities that the country is going to develop, to ensure that these projects are incorporated”.

Kogas is a partner in Area 4 of the Rovuma basin, operated by Mozambique Rovuma Venture (MRV), in co-ownership with ExxonMobil, Eni and CNPC (China), which holds a 70% stake in the concession contract. Kogas, Galp and Empresa Nacional de Hidrocarbonetos each hold a 10% stake.

The managing director of Puma Energy Mozambique, Danilo Correia, assured that the government is in the process of paying off the debt accumulated with the oil companies responsible for importing and distributing liquid fuels in the country.

During a press conference dedicated to the presentation of a report on energy security and infrastructure development, Correia explained that the debt, which peaked in March 2021 due to the effects of the war between Russia and Ukraine, is being significantly reduced. The amount owed to the company he leads has already fallen considerably, from 50 million dollars to 14 million.

The managing director expressed confidence that, if international prices remain stable in the coming months, the debt could soon be fully resolved. He highlighted the collaborative work between the government and companies in recent months as a key factor in this progress.

In addition, Correia emphasized that the debt payment process is not limited to Puma Energy, but extends to all the oil companies involved, recognizing that each case is unique.

In March last year, Mozambique’s Confederation of Economic Associations (CTA) reported a significant increase in the government’s debt to oil companies, from 120 million to around 450 million dollars. This worrying scenario has been identified as a threat to the sector’s financial stability.

The lack of resolution to this debt has already resulted in the collapse of some importers. In April 2022, the Mozambican Association of Oil Companies said that at least 15 of its 30 member companies were affected by debt related to the conflict between Russia and Ukraine.