ourEconomy: Opinion

War in Mozambique: a natural gas blessing, turned curse

As the world battles COVID-19, a different war is playing out in Mozambique, home to one of the world’s richest recent gas finds.

Kudzai Chimhangwa
26 June 2020
Image: Petroleum Economist

As the world is engulfed with battling the COVID 19 outbreak, a different war of gory proportions is playing out in the northern region of Mozambique, home to one of the world’s recent richest gas finds. The region of Cabo Delgado, bordering Tanzania, is playing host to a spate of violence pitting government forces against internal rebels known as RENAMO and insurgents claiming links to ISIS. This violent orgy began in October 2017 but, despite early warning signals about terrorism in Mozambique from the African Union (AU) in February, the Southern African Development Community (SADC) finally acknowledged the existence of a real crisis at its Extraordinary Summit on the 19th of May this year.

The war is a catastrophe threatening to spill across borders to other member states. Despite this, multinational corporations such as French oil company Total, the United State’s EXIM Bank, ExxonMobil, BP and Shell among others are pouring billions of US dollars into gas projects in Cabo Delgado. With casualties running into thousands of deaths, the efficiency of regional institutions in conflict resolution and the influence of multinational corporations in such crises is a moral issue that should be of global concern.

The rundown

The Cabo Delgado province was once the core of the Mozambican national liberation struggle against Portuguese colonial rule. It became the cornerstone for the spread of socialism as a national political ideology. Now, it is a hotspot of outlandish activities.

In 2010, the discovery of natural gas deposits in the Rovuma basin, below offshore deep waters in the Indian Ocean, by United States energy company Anadarko, attracted the attention of global capital. In 2011, Italian energy company ENI SpA also discovered an immense gas field in the area.

Mounting evidence points to the fact that the discovery of gas fields by foreign multinationals and subsequent pouring in of billions of dollars worth of investment could be a factor in the brutal war that has broken out in the Cabo Delgado province. Multinational corporations, Islamist extremists and the government of Mozambique are seeking to cash in on the discoveries, regardless of the socio-political costs. The increased scale of attacks against state military facilities and government buildings is a mirror of the complex nature of the conflict pitting government forces against Islamist insurgents, albeit with the indirect influence of foreign capital .

Earlier this month, Roman Catholic Bishop of Pemba Luiz Fernando Lisboa spoke out against the destruction of local people's history and culture because of this conflict, adding that it increasingly looks as if Cabo Delgado province is being divided and parceled out to big multinational companies.

Ilam Rawoot of Justica Ambiental/Friends of the Earth Mozambique, co-ordinator of the No to Gas! campaign, argues that there is a link between the presence of multinational corporations and the lethal conflict playing out. Local populations in the province, who have not benefited from the gas discoveries, feel that the thousands of government troops deployed are there only to protect the interests of foreign firms rather than citizens. Earlier this year, more soldiers were deployed into the province specifically at the request of Exxonmobil and Total, who feared for their investments. Only one attack against a company has been recorded over the past two years, lending credence to claims about the presence of foreign companies fuelling the war.

The war culminated in the seizure of two towns by insurgents, Mocimboa da Praia and Quissanga, in March this year. Going by the name Ahlu Sunnah Wa-Jama (ASWJ), translated to mean ‘adherents of the prophetic traditions,’ their attack was classified as the most daring attack on Mocimboa da Praia, which is about 90km from a major liquified natural gas (LNG) project worth about USD60 Billion.

The next month, more than 50 young people were shot dead in cold blood or beheaded for declining to join the rank and file of the insurgent army in Xitaxi, in Muidumbe district.

Exacerbating the situation is the fact that the Mozambican security forces lack training in counter-extremist operations, and do not have sufficient intelligence to effectively counter ASWJ alone.

Security forces failed to defend or resist the occupation of the two towns, Mocimboa da Praia and Quissanga. Some soldiers even avoided combat by shedding their uniforms to blend in with civilians.

The government has also roped in mercenary outfits from South Africa to help crush the insurgency, with no luck. For example, about 150 Russian mercenaries deployed last year, with ties to the Vladimir Putin linked Wagner Group, a paramilitary unit known for its shady involvement in wars ranging from the Central African Republic, Syria and Libya.

Wagner Group were forced to beat a hasty retreat after suffering casualties.

The Mozambican government has responded in a very militarised and heavy-handed manner, in a province with locals who feel that they have been side-lined in national development programs. Security analysts posit that by enforcing repressive military campaigns, the government risks repeating the same mistakes in tackling extremist insurgencies as was the case in Nigeria, where Boko Haram terrorises, and Al Shabaab in Somalia. They argue that such heavy handed tactics, often riddled with gross human rights abuses, will only backfire and provide excellent breeding grounds for insurgency recruitment. In comparison to other provinces, Cabo Delgado has for years been in a penurious state and locals do not have access to education, health and social services.

Lately, the insurgents embarked on a campaign to win hearts and souls of locals by looting shops and distributing the looted items for free to citizens. Discontent with the state is already high as a failed land resettlement program left thousands of households and livelihoods dependent on farming and fishing displaced.

The Armed Conflict Location & Event Data Project reported that abductions and beheadings were perpetrated by insurgents this month. On the 8th of June, 2 civilians were killed in Tapara, Quissanga district. One was killed for having a gun in his house while the other was murdered for being a Christian. The insurgents then abducted 3 women and razed the village to the ground.

Following a government military offensive the next day, insurgents withdrew northward from Marere and kidnapped 2 girls from fields around Mpanga.

The insurgents also launched four attacks in Macomia district where they called out 11 people by name and beheaded them all. They then abducted another 7 girls in a daytime attack. Later at night, the insurgents launched another attack in Nacutuco, where they killed six civilians in a night raid, and burned homes in nearby Ingoane.

British foreign secretary Dominic Raab expressed the United Kingdom's desire to support Mozambique's counter insurgency operations during a phone call with Mozambique's President, Filipe Nyusi.

In a brief interview, Mozambican journalist Dercio Tsandzana, who has been following developments on the ground, said that the truth of the facts pertaining to recruitment of local populations, is not yet known.

“Nobody really confirms it... the only example I can give is that there are some insurgents who hide in homes of the local population,” said Tsandzana.

Tracking the money trail

Despite the escalating insurgency attacks in the province, this has not deterred multinational investors from pouring big money into natural gas related projects. Rather, their concern has been about the slowdown in business due to COVID 19, the global slump in oil prices and an apparent over supply of natural gas on the world market.

The natural gas exploration is offshore, but support facilities are onshore and remain highly vulnerable to attacks by the insurgents.

Earlier this month, a consortium, the African corporate and investment bank (RMB), announced that a liquified natural gas (LNG) project in Mozambique is expected to receive USD15 billion worth of financing commitments. The signing event is expected to commence later this month.

The Mozambique LNG project will be spearheaded by Total SA with expectations of future revenue generation above USD40 billion.

Not to be outdone, Mozambique’s National Petroleum Institute recently announced that the final investment decision (FID) for its planned USD30 billion Rovuma liquefied natural gas project will be taken by ExxonMobil next year. The FID had been scheduled for the first half of this year but due to the COVID 19 pandemic and capital expenditure cuts, this had to be rescheduled. ExxonMobil’s capital investment for this year is forecast to be about USD23 billion, 43% down from the USD33 billion previously reported.

Lenders continue to support Total’s Mozambique LNG project due to its strategic location in the Indian Ocean for ease of exports and the sheer size of deposits in sight.

American firm Anadarko Petroleum Corporation was bought by Occidental Petroleum Corporation, and the project sold to Total in 2019. Total completed the acquisition of Anadarko, which held a 26.5% stake in Mozambique’s LNG project, for USD 3.9 billion.

Analysts say that with 150 plus trillion cubic feet of reserves, these are the basis for a new, globally significant energy jurisdiction. Exxon’s Rovuma LNG venture is adjacent to Total’s and the two could have the capacity to export over 90 million tonnes of LNG annually.

In May this year, the US EXIM Bank amended its previously approved 2019 direct loan supporting US exports for the development and construction of the Total operated LNG project located on the Afungi Peninsula, in northern Mozambique.

The original scope of the USD 4.7 billion loan for the project was amended from the exclusively onshore portion of the LNG plant to include an estimated USD1.8 billion to support the project’s offshore production. US EXIM Bank President Kimberly Reed said that the institution’s financing for the LNG project is reflective of President Donald Trump’s Prosper Africa initiative to unlock opportunities for US businesses in Africa.

The government of Mozambique recently provided a USD2.25 billion guarantee to partners in Mozambique's LNG, with assurance that the it will pay the state oil company's equity share if required. Partners agreed to settle for the government guarantee in lieu of an immediate equity contribution from the state owned National Hydrocarbon Company (ENH.)

Is there method to SADC’s dithering?

As the insurgency continues to evolve in Cabo Delgado, with new tactics and methods of expansive operation, the region remains highly vulnerable to Islamist extremism through porous borders.

From a regional viewpoint, the violent extremism should have been countered years ago.

The fact that it took two and a half years for the Mozambican government to formally request assistance from the Southern African Development Community, tells a lot about member states’ confidence in the regional institution. Instead, the country chose to approach private military contractors from Russia and South Africa and also chose to approach some member states in their individual capacities, rather than as a bloc. For example, Mozambican President Filipe Nyusi first met with Zimbabwean President Emmerson Mnangagwa in April to discuss the deteriorating security situation before the SADC extraordinary troika meeting the following month.

At the 33rd African Union Summit held in Addis Ababa in February this year, African Union leaders raised the issue of a ‘totally new threat’ that had reached ‘unprecedented levels’ in the Republic of Mozambique.

However, the AU could not immediately intervene in the unfolding crisis due to two factors. On the one hand, the Mozambican government took long to acknowledge the gravity of the situation, preferring to refer to it as an internal problem. On the other hand, the principle of subsidiarity governing relations between the AU and regional economic communities, meant that SADC had to deal with the matter first.

Cabo Delgado is a big smuggling conduit for drugs like heroine from Afghanistan, wildlife and gold, posing a huge threat to regional stability.

Liesl Louw-Vaudran, Senior Researcher with the Institute for Security Studies Pretoria contends that although Mozambique sits on the AU Peace and Security Council (PSC), the situation was unlikely to reach the official agenda of the council any time soon.

Louw-Vaudran observes that the link between weak governance and economic development and the growth of terror groups is increasingly gaining traction.

The Institute contends that the increase in ruthless violence in northern Mozambique, including the decapitations of women and children, has sent clear signals that a violent jihadist movement is evolving in Southern Africa.

A communique released after the extraordinary SADC organ summit hosted in Harare on the 19th of May expresses solidarity with Mozambique but nothing specific was presented.

Despite a communique condemning the attacks, there are still no indications as to SADC’s plan of action.

In an interview, Mozambique based lecturer and commentator at Universidade Pungue, Francis Madhanzi, said that most countries in the SADC region are already caught up in fighting the COVID 19 pandemic, so any delays in action should not be ruled out.

“People in areas under siege can’t carry out any significant economic activities,” he said, adding that agriculture, social services and education have all been brought to a halt.

“The government of Mozambique seems committed (to ending the war) but the army is incapacitated. The military and security services need to be restructured, reformed and improved in their conduct. The soldiers are demoralised, demotivated or corrupted by an emerging war economy,” said Madhanzi.

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