The Final Investment Decision (DFI) of the North Coral Project FLNG, confirmed this Thursday by the concessionaires of Area 4 of the Rovuma Basin – led by Italian petrochemical ENI – represents a "clear and unequivocal statement" that the country "is decisively positioned as a global energy player". This is the understanding of the President of the Republic, expressed during the signing ceremony of the DFI Resolution.
According to Daniel Chapo, the Northern Coral Project FLNG, whose Development Plan was approved in April, "is a step towards Mozambique's economic independence" and "strengthening our resilience". It also shows that Mozambique is "able to transform natural resources into economic, social and human development".
With capacity to produce 3.55 million tonnes of liquefied natural gas and 4,300 barrels of condensed gas per year, the platform is expected to start operations in the second quarter of 2028, with the project's useful life estimated at 30 years.
According to Daniel Chapo, with the entry into operation of the North Coral, Mozambique will contribute, every year, with about seven million tons of liquefied natural gas on the world market, "becoming the world's 14th largest exporter and the fourth largest in Africa".
With this production, the government expects to raise USD 23 billion in revenue during the 30 years of the project, "resources that will strengthen our ability to finance sectors such as agriculture, infrastructure, industry, tourism, education, health and social programs for the Mozambican people", according to the Head of State.
Chapo argues that the Northern Coral FLNG project mirrors the commitment made by its Government to improve the terms of concession contracts. So it says that the country will receive, over the 30 years, 25% of liquefied natural gas and 100% of condensed gas for energy generation.
For Chapo, this will create "solid foundations for greater involvement of national companies in the provision of services to the oil industry". "The North Coral must be a pillar of Mozambique's economic and social stability, a catalyst for industrialisation and an instrument of inclusion," he stressed.
"These negotiations were not easy, but they were quick," he said, thanking ENI "for the understanding of respecting Mozambican law and some demands that were made by the Government of Mozambique."
Success of the Southern Coral will depend on our management capacity
In addition to financial gains for Mozambican State coffers, Chapo states that the Northern Coral Project FLNG will bring social gains, such as the generation of 1,400 jobs for Mozambican citizens and the investment of USD 3 billion in local content, of which USD 800 million will be disbursed in the first six years of the project. "This is a unique opportunity for Micro, Small and Medium-sized National Companies to train themselves technically and financially, becoming competitive and suppliers of the global market," he assured.
However, he warns that the success of the Southern Coral will also depend "on our ability to manage it with responsibility, competence, humility, transparency and above all good governance". He argues that it is necessary to invest in good governance and transparency, especially in revenue management so that "every Mozambican can see concrete improvements in his life in the project".
Without deepening the matter, the President of the Republic said that the Southern Coral FLNG brought lessons on the importance of good governance, transparency and responsible management of revenue for the development of the country and for the creation of better living conditions for Mozambicans.
Remember that Mozambique grossed between 2022 and 2024 USD 164.69 million of Rovuma gas, equivalent to 10,523.41 million Meticals. However, in the Report and Opinion on the State General Account of 2023, the Administrative Court reported the lack of USD 33.65 million in the Transitional Account, a sub-account of the Sovereign Fund, intended for the deposit of Rovuma gas revenues, before its division into the State Budget (60%) and the Sovereign Fund (40%).
In her defense, during the parliamentary debate held last March, the Minister of Finance, Carla Louveira (who was Vice Minister of Economics and Finance, in the last government of Filipe Nyusi), said that the USD 33.65 million were used in the Economic and Social Plans of 2022, 2023 and 2024 and that the value never went beyond the Transitional Account, housed in the Central Bank.
It should be noted that the transfer of the value in question is regulated by Article 6(2) of Law No 1/2024 of 9 January establishing the Sovereign Fund of Mozambique, which provides that the revenue of the Sovereign Fund is deposited in the Transitional Account, before its transfer to the entity's account and to the State Budget.
At a time when the world is debating the change in the energy matrix, replacing fossil fuel-based energy sources with renewable and clean sources, Daniel Chapo understands that, due to its location and the quality of its (low sulphur) gas and its "world-class" reserves, Mozambique is well positioned to ensure this energy transition.
It should be noted that at the hearing granted by the President of the Republic on the morning of Thursday, the Executive Director of the Italian multinational ENI, Claudio Descalzi, considered the DFI a "very important and critical" moment. At the meeting, he reaffirmed ENI's commitment to invest in agricultural programmes that could create some 100,000 new jobs in the country. It also announced a project for the construction of a 75 MW power station to be built in Temane, Inhambane province. The project is valued at USD 130 million. (A. Maolela)
