The global LNG market has been undermined just when ExxonMobil was expected to reach a final investment decision on its 15.2m t/yr Rovuma LNG scheme – the biggest of three projects aiming to channel at least $50bn of foreign investment (and possibly much more) into Mozambique over the next decade.The gas boom was expected to drive spectacular levels of economic growth, but while Mozambican economic planners and their allies contemplate the LNG project’s start-up being delayed possibly until 2030, the government is confronted with a burgeoning Islamist insurgency and huge economic pressures.

On 7 April, ExxonMobil formally announced it was delaying sanction for Rovuma LNG, as it joined other majors in cutting capital spending by at least 25%.The US supermajor said it “continues to actively work with its partners and the government to optimise development plans by improving synergies and exploring opportunities related to the current lower-cost environment”. In other words, costs must be significantly cut. S&P Global Platts analyst Luke Cottell on 9 April observed that the estimated $27bn- $30bn price tag was “clearly unappetising”.

President Filipe Nyusi’s under-pressure administration has been pushing IOCs to stick to project schedules. Prime Minister Carlos Agostinho do Rosàrio has ordered recently appointed Empresa Nacional de Hidrocarbonetos (ENH) chairman Estevão Tomas Rafael Pale to ensure timetables are kept to, after his predecessor as ENH head, Omar Mitha, had suggested delays were likely. All is not lost: the more advanced 3.4m t/yr floating Coral LNG project – operated by Eni with ExxonMobil as a partner – still expects first LNG in 2022, while the eventual 12.9m t/yr Total-operated, Mozambique LNG project could yet start up in 2024 (AE 401/13).

In public, IOCs have played down the violent Islamist insurgency in the north, arguing their LNG developments at Afungi were adequately defended. However, Brussels-based International Crisis Group is not alone in observing that attacks in Cabo Delgado province, which have been common since October 2017, have escalated sharply since late 2019 (AE 388/17, 371/1). It is the most serious but not the only security crisis: Renamo Military Junta – a splinter group from the main opposition Renamo party, which has opted for peaceful coexistence (AE 369/18) – has been attacking villages in central Mozambique.

Despite the large-scale mobilisation of army units, the Islamist insurgency shows no sign of going away.This points to some local support for the still little understood Ansar Al-Sunna insurgency and alienation from the central government in Mozambique’s poorest region.The deployment of Kremlin- linked Wagner Group mercenaries backfired – showing the jihadists have firepower – and in late March an Islamic State flag flew over Mocímboa da Praia, a port town only 60km from Afungi. In early April, jihadists occupied several villages, including Ntchinga, a Frelimo base since the liberation war whose garrison is believed to have fled on their arrival.

Natural gas developments – supported by reforms in the power sector and the promotion of renewables (AE 398/10) – offer a more prosperous and sustainable future for Mozambique, which remains among the poorest countries in the world.A recentWorld Bank report observed that growth and better services have been concentrated among the wealthier segments of society and in urban centres, “hindering Mozambique’s progress in achieving shared prosperity”. Mozambique, the WBG said,“is now among the most unequal countries in sub-Saharan Africa”.

Nyusi’s promise of improved governance has yet to be fulfilled. Fallout from a debt scandal involving some $2.2bn in loans raised without creditor approval continues to undermine investor confidence (AE 320/16). Natural disasters led by Typhoon Idai have underlined Mozambique’s economic fragility and lack of government capacity (AE 389/21). Nyusi’s re-election last October was tainted with claims of widespread vote-rigging (AE 402/20).While Mozambique is likely to get some LNG dividend in the next decade, it faces a tough road to achieve the promised better future.