Bottom Line: Investors should be on the alert over the increasing momentum of a militant insurgency that could threaten coal and gas investments in Mozambique.
Analysis: At a time when the gas game is heating up in Mozambique, and key players like Anadarko, Eni and Sasol are raising the stakes in a massive planned offshore gas project, the militant wing of RENAMO (which is an official opposition party) is gaining momentum. Clashes are erupting with greater frequency between Mozambique's ruling party and former civil war opponents organized under the grouping of RENAMO. A shaky peace agreement has been in place since 1992 between the two sides, but RENAMO officially renounced the agreement on 21 October in response to a security force raid on its headquarters in Sathunjira. Tensions between Renamo and the Frelimo-led government started escalating last year, after the group's leader Dhlakama set up camp in the Gorongosa mountains to retrain former guerrilla fighters.
Over the past year, attacks by RENAMO have been sporadic, but the past two weeks have seen a turn for the worse. The worsening security situation comes as Anadarko negotiates with potential buyers for its offshore gas project and plans to ship its first LNG from Mozambique by 2018. By the end of the year, Anadarko will have invested some $3 billion in developing its discoveries offshore Mozambique. Anadarko will have four liquefaction plants or trains to start with, and is eyeing the construction of up…
Bottom Line: Investors should be on the alert over the increasing momentum of a militant insurgency that could threaten coal and gas investments in Mozambique.
Analysis: At a time when the gas game is heating up in Mozambique, and key players like Anadarko, Eni and Sasol are raising the stakes in a massive planned offshore gas project, the militant wing of RENAMO (which is an official opposition party) is gaining momentum. Clashes are erupting with greater frequency between Mozambique's ruling party and former civil war opponents organized under the grouping of RENAMO. A shaky peace agreement has been in place since 1992 between the two sides, but RENAMO officially renounced the agreement on 21 October in response to a security force raid on its headquarters in Sathunjira. Tensions between Renamo and the Frelimo-led government started escalating last year, after the group's leader Dhlakama set up camp in the Gorongosa mountains to retrain former guerrilla fighters.
Over the past year, attacks by RENAMO have been sporadic, but the past two weeks have seen a turn for the worse. The worsening security situation comes as Anadarko negotiates with potential buyers for its offshore gas project and plans to ship its first LNG from Mozambique by 2018. By the end of the year, Anadarko will have invested some $3 billion in developing its discoveries offshore Mozambique. Anadarko will have four liquefaction plants or trains to start with, and is eyeing the construction of up to 6 more. Italy's Eni is also considering the sale of another 10% stake in a major gas block here, and South African petrochemicals giant Sasol is closely watching gas prospecting. In September, Eni announced another gas discovery in the prolific Rovuma basin. At stake for all is about 150 trillion cubic feet of gas so far found offshore Mozambique.
Recommendation: At this time, as we have noted before, RENAMO does not appear to have the capabilities to launch a full-scale insurgency across the country; however, its asymmetric attacks will target key infrastructure, specifically coal mining and gas projects, and as the crisis continues to be mismanaged, we expect these attacks to gain in momentum over the coming weeks and months. While offshore operations are not threatened by the rising RENAMO insurgency in Mozambique, government stability and onshore infrastructure are of particular concern.
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