According to BP’s Energy Outlook 2024, global traded volumes of liquefied natural gas (LNG) are expected to grow by 43% by 2030, from 543 bcm in 2022. In recent years, LNG exports have been dominated by the US, Australia and Qatar, which had a combined LNG export capacity of about 257 mn tpa in 2023 (60% of total global LNG capacity), according to the Energy Information Administration (EIA). By 2030, Qatar and the US are expected to add about 150 mn tpa of LNG feedstock, securing the top two spots in global LNG export capacity. New additions are expected to come from LNG plants currently under construction in the US (84.1 mn tpa) and from the expansion phases of Qatar Energy’s North Field (65 mn tpa). Nevertheless, given current demand expectations, there is still a need for additional LNG supply, strengthening the economics of developing long-shelved gas projects in border areas. Mozambique and Tanzania, which host the East African Ruvuma-Rufiji Gas Basin (EARR), could potentially be the biggest beneficiaries of this projected demand, given the basin’s abundant gas reserves (165.7 trillion cubic feet*) and proximity to South Asian import markets. However, the burning question remains: how quickly can the world expect the EARR gas basin to rebound given increasing demand for LNG?

It is important to stress that the EARR gas basin has not been able to reach its full potential due to a number of endemic bottlenecks in host countries. In Tanzania, the US$40 billion Tanzania LNG project, which is to source gas feedstocks from six fields in Blocks 1 and 4 (Shell) and Block 2 (Equinor), has experienced significant delays due to lengthy negotiations and unattractive financial terms resulting from high domestic supply commitments.

The story behind the untapped gas reserves offshore Mozambique is quite different. The main culprit is the Islamist insurgency in Cabo Delgado province. The conflict has led to delays in Final Investment Decisions (FIDs) and project start-ups as force majeure has been declared for key projects. One example is TotalEnergies’ use of force majeure on its 13 million tonnes per annum LNG project in Mozambique, which delayed the start of production at the operator’s Golfinho Atum field to 2028, nine years after approval. Similarly, ExxonMobil’s Rovuma LNG project also felt the knock-on effects of TotalEnergies’ declaration of force majeure as it plans to share some of the LNG project’s assets in Mozambique. However, ExxonMobil has used this as an opportunity to reduce costs by redesigning the design plan from its original two-train, 15.2 million tonne block-type plant to an 18 million tonne plant that is now modular in design, with some emphasis on reducing the project’s greenhouse gas emissions. To date, ExxonMobil has launched tenders for a front-end engineering and design (FEED) contract and an engineering, procurement, construction and installation (EPCI) option for the subsea-to-shore gas gathering facilities.

Another factor contributing to the untimely development of Mozambique’s resources is the complicated project economics. TotalEnergies highlighted this in 2023 when it reported that supply chain inflationary pressures were making it even more difficult to restart its $20 billion Mozambique LNG project. However, there are signs of positive developments, with TotalEnergies reporting in the company’s April 2024 earnings call that contractors have agreed to reverse contract inflation plans; this is no longer an obstacle to the project’s approval decision.