Tanzania: BG exit rumours resurface

The near-perennial rumours that BG may sell its 60% stake share in Tanzania’s Offshore Block 3 have resurfaced this week. The Sunday Times reports that BG is quietly searching for a buyer and a sale is likely, echoing rumours that have been circulating for some months. 

BG operates and holds 60% stakes in Blocks 1, 3 and 4 with Ophir holding the remaining 40% in each. The Tanzania fields are incredibly large, but their size is equalled by the cost of bringing the fields to production. Tens of billions of dollars will need to be invested, partly because the country is bereft of even the most basic infrastructure, including a port, roads, and power that would be required for a gas liquefaction plant.

This comes at a time when BG is looking to downsize its global empire, which includes the North Sea, Brazil, East Africa and Australia, following a series of profit warnings that led to the resignation of its chief executive, Chris Finlayson.

Although it is currently understood that BG is looking to sell its entire 60% stake in Tanzania’s Block 3 exploration area, BG also owns 60% of Blocks 1 and 4. This means that BG has the option of selling a minority stake, bringing in cash, reducing its share of future spending, while enabling it to keep operational control of the development.

One industry source has told Menas Associates that ExxonMobil, which is the minority partner in Block 2, may also consider buying out its partner Statoil. A pull out by BG would affect the management of the proposed LNG project because the project manager is currently a BG position based in the UK. This would be mitigated by ExxonMobil’s presence in the project already. However, no move is likely until there is agreement on outstanding issues, including gas pricing, domestic market obligations and the finalisation of the project site.

For more news and expert analysis about East Africa, please see East Africa Politics & Security.

© 2014 Menas Associates

Mozambican parliament approves new Hydrocarbon Law

Mozambique’s long awaited petroleum law has been approved by the parliament with substantial amendments by MPs who argued that the changes will strengthen the role of the Mozambican state in oil and gas exploration and production.

The bill, which will come into effect by the end of the year, was approved with votes from Frelimo and MDM. Renamo voted against the bill on the grounds the High Authority of the Extractive Industry – the body that oversees oil and gas operations - must be composed by elected members from all political parties.

The most important point in the new law is perhaps the fact that the state, through the National Hydrocarbon Company (ENH), controls the production, transport, marketing and transformation of all LNG and their derivatives.

It also states that the government must create the conditions for the involvement of Mozambican business people in the oil and gas industry. This is in response to local businesses who have been demanding a better share in the oil and gas business.

The sector is currently dominated by giant multinationals such as Anadarko and ENI and their own international service suppliers. It is very unlikely that any local company will venture into bidding for concessions of oil and gas exploration areas because they neither have the necessary expertise, nor the funds. They have, however, asked the government to introduce a special regiment that forces multinationals to contract local companies for service and products supply.

For a comprehensive analysis of Mozambique’s petroleum law, the Renamo amnesty deal - otherwise unavailable in the international press - and the political, business and security issues affecting Mozambique, please see our latest issue of Mozambique Politics and Security.

© 2014 Menas Associates

Mozambique: Amnesty allows Renamo leader, Alphonso Dhlaklama, to stand in upcoming presidential elections

Mozambique's parliament has approved an amnesty law that will allow Afonso Dhlaklama, leader of the opposition Renamo party, to leave his hideaway in the bush, sign a peace accord with President Armando Guebuza and run in a 15 October election, lawmakers have said.

The law, approved late on 12 August, also applies to Dhlakama's supporters, who have clashed with the army since 2012. The violence raised fears for stability in the southern African nation, which is hoping to attract foreign investment to develop its substantial coal and offshore gas deposits.

The amnesty is part of a peace deal between Renamo and the ruling Frelimo party, adversaries in Mozambique’s 1975-1992 civil war, and means Dhlakama will not face prosecution or arrest for the attacks carried out by his followers over the last year.

The constitution bars the incumbent Guebuza from running for a third term meaning the former Defence Minister, Filipe Nyusi, will run as the Frelimo candidate. Dhlaklama is now expected to travel to the capital Maputo to sign a formal peace accord with Guebuza ahead of the 15 October election, in which he has registered as Renamo's presidential candidate.

For further information please see next week’s issue of Mozambique Politics & Security, which will provide background and analysis about the amnesty deal, otherwise unavailable in the international press.

Mozambique expanding electricity supply to meet the needs of a growing economy

Mozambique´s Energy Minister Salvador Namburete says that his government is implementing plans to expand electricity supply to meet the needs of a growing economy. According to the state-run Radio Mozambique, the minister made the announcement at his Ministry’s Coordinating Council in the Niassa Province’s northern provincial capital of Lichinga.

Namburete stated that demand for electricity in Mozambique grew at an annual rate of 13% between 2011 and 2013 compared to 10% per annum in the previous decade. Demand is particularly high in the northern provinces of Nampula, Cabo Delgado and Niassa, with growth rates of 20% annually, almost double the national average.

While the government’s electrification programme has extended the national grid to 121 of the country’s 128 districts, Mozambicans will have to wait until the end of 2014 for the remaining seven districts to be connected. Until then, however, patience will remain high as significant steps to redress the electricity supply failures have been made in the last decade.

Mozambique is a major regional producer of hydro-electric power, mainly from the 2,075 MW capacity Cahora Bassa dam but, in 2004, only 7% of the country’s population had access to electricity. Over the last decade, however, the government’s electrification programme has raised that figure to just over 40% in 2014.

For more news and expert analysis about Mozambique, please see Mozambique Politics & Security.

© 2014 Menas Associates

Elections hold key to elusive Mozambique peace deal

Aside from Mozambique’s upcoming October elections, both the government and the Mozambican National Resistance (Renamo) have announced that they have made significant progresses in peace talks and are close to reaching a deal. Government spokesman, Gabriel Muthisse said both sides have made concessions on the main points of disagreements.

Negotiators have been pursuing common grounds on issues including the integration of Renamo men in the army and the withdrawal of the army's soldiers near Gorongosa. One of four Renamo spokesmen, Saimone Macuiana, who leads the Renamo delegation in talks with the government, had said that they will soon be able to publish the terms of reference for international observers who will oversee disarmament and a ceasefire.

Bishop Dinis Sengulane, one of the mediators of the talks and who was in London last week, has told Mozambique Politics & Security that this should happen on time to allow RENAMO leader, Afonso Dhlakama, to campaign for elections. He has also hinted that some of the outstanding issues may have to wait until after the elections.

Sources say that Dhlakama is expected to return to Maputo to launch his presidential campaign sometime in August. As for a possible meeting between Dhlakama and President Guebuza, the Renamo leader says that the detention of his spokesman Antonio Muchanga has made him reconsider that possibility. According to him, Guebuza has invited him to Maputo to arrest or assassinate him.

For more news and expert analysis about Mozambique, please see Mozambique Politics & Security.

© 2014 Menas Associates

More alleged Renamo attacks and civilian deaths in Mozambique

There have been more alleged Renamo attacks in Sofala Province near Muxungue, with one taking place on 25 June, Mozambique’s Independence Day. Media reports suggest that during the week of 23-28 June, at least 12 people were killed, including four civilians, and many others were injured.

The army-protected convoys have now been reduced, adversely disrupting trade between the centre and south of the country. Lorry drivers travelling from Zimbabwe, Zambia and Malawi to the regional port of Beira have also been affected.

There have also been reports of minor attacks and exchanges of gunfire in other regions of the country. In Tete Province, for example, the local media reported that Renamo had attacked a police post in Chiuta and stole weapons. There were other cases of armed attacks in the province but it is believed that these could be the work of local criminals taking advantage of the current security instability.

There were reports of an exchange of gunfire between Renamo men and government soldiers in Zambezia Province when the army tried to dismantle a temporary Renamo base near Gurue District. Some of these attacks took place just before and during the Renamo meeting in Beira, and Renamo's leader Afonso Dhlakama has been asked by his supporters to explain why civilians were targeted. His response was that "the government is using civilian cars to transport weapons by road".

Dhlakama’s position has also been corroborated by a local priest, Jose Luiz Gonzalez, who has been working for the past six years on a local project run by US-based Catholic missionaries. He told reporters that Renamo does not attack civilians and that when there are civilian victims, it is because there are soldiers in the civilian convoys. The priest also stressed that in his area of Muxungue the local people do not agree with Renamo’s plan to divide the country and also do not support the violence.

For more news and expert analysis about Mozambique, please see Mozambique Politics & Security.

© 2014 Menas Associates

Mozambique: Renamo's National Council meets without Dhlakama

As expected, Renamo’s National Council is meeting this week in the central city of Beira. The agenda is primarily to discuss their electoral manifesto for October's general elections. For the first time in Renamo history, party leader Afonso Dhlakama will be absent. The party spokesman has said, however, that Dhlakama will launch his presidential election campaign by telephone from his Gorongosa mountain hideout.

Dhlakama’s absence is important because the meeting will also see the election of representatives as prospective MPs, and also appoint the party’s presidential candidate. There is no doubt that Dhlakama will be proclaimed as Renamo’s presidential candidate but the party is still very behind Frelimo and MDM.

Renamo has not officially registered a candidate for October’s elections, and its members are yet to collect the supporting signatures that Dhlakama will need for his presidential bid. The question many are asking at this stage is whether Renamo will manage - in just three months - to assemble an effective electoral arsenal to win enough seats in parliament, or whether will it opt to continue to rely on bullets instead of the ballot to change Mozambique's political system.

For more news and expert analysis about Mozambique, please see Mozambique Politics & Security.

© 2014 Menas Associates