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The extent of debt, governance and macroeconomic problems confronting President Filipe Nyusi’s government was underlined by an International Monetary Fund (IMF) mission which visited in mid-June. Arguments continue to rage about repayment of the Ematum tuna company’s bonds – seen as confirmation of Mozambique’s market credibility when they were issued in 2013, but since revealed as a major instrument for enriching allies of ex-president Armando Guebuza. IMF managing director Christine Lagarde in May accused the government of “concealing corruption”. The UK, Portugal and other donors have suspended significant amounts of development assistance.

With sky-high prices apparently a thing of the past, the outlook is gloomy for liquefied natural gas (LNG) exporters, even in the most lucrative markets, such as Japan. With a predicted supply glut running into the next decade and price pressures accentuated by the fast-emerging spot market (for more on this see African Energy’s sister publication Gulf States News http://www.gsn-online.com/amid-shifting-global-gas-supply-gulf-states-emerge-as-their-own-best-market) only a few major projects are still expected to go ahead worldwide. In Africa, these include Eni’s Zohr field in Egypt and developments in Mozambique’s Rovuma Basin (as well as its smaller, more southerly fields supplying South Africa).

Ncondezi Energy and Shanghai Electric Power Company (SEP) on 7 July announced the signing of a shareholders’ agreement term sheet for the Ncondezi coal power scheme at a meeting in Maputo. Ncondezi said the agreement represented a key legal and financial milestone towards finalising the joint development agreement in Q3 2016, the engineering, procurement and construction and operations and maintenance contracts in Q4 2016 and financial close in H1 2017. The first phase of the integrated coal mine and power scheme in Tete province will develop a 300MW plant, and the project has potential to expand to 1,800MW.

Sasol Petroleum Mozambique has given Amec Foster Wheeler a detailed design and engineering contract for surface facilities for Phase 1 Tranche 1 of the PSA development at Temane. The scope of work is for an integrated oil, liquefied petroleum gas and gas project, including flowlines for the fields, located adjacent to the existing Temane Central Processing Facility.

An agreement for Shanghai Electric Power (SEP) to take 60% in the Ncondezi coal power scheme will give the Chinese utility a regional foothold in the southern African electricity market, according to Ncondezi Energy chief executive Hanno Pengilly.Pengilly told African Energy in an interview that while the first phase of the integrated coal mine and power scheme in Tete province would develop a 300MW plant, the project had the potential to expand to 1,800MW. SEP will provide 100% of the debt financing, and financial close is planned for mid-2017.

Sasol on 26 May began drilling a first well under its field development plan (FDP) for the Production-Sharing Agreement (PSA) licence in Inhambane province, adjacent to its current producing Petroleum Production Agreement licence.The PSA development is an integrated oil, liquefied petroleum gas (LPG) and gas project, and the drilling campaign is part of the first phase of the FDP for the delineation and initial development of the Temane G8, Temane East, Inhassoro G6 and Inhassoro G10 reservoirs.

Wentworth Resources is to take over as operator of the Rovuma Onshore concession and carry out appraisal of the Tembo-1 gas discovery. The company said it had applied to the Ministry of Energy and Minerals for approval of a proposed appraisal programme for Tembo-1, and to increase its holding in Rovuma Onshore from 11.59% to 85%.Current operator Anadarko, Maurel & Prom and Thailand’s PTT Exploration and Production have all notified the National Petroleum Institute (INP) of the relinquishment of their interests in the block with effect from 31 August 2015.

A joint venture agreement for the development of a 2,600km pipeline from northern Mozambique to Gauteng was signed in Maputo on 22 April by Empresa Nacional de Hidrocarbonetos, Profin Consulting, China Petroleum Pipeline Bureau, China Petroleum & Technology Development Corporation and Progas Investment Group.

Mozambican officials remain bullish about the potential for gas-to-power schemes to meet their ambitious forecast of representing 42% of the energy mix by 2020. New gas-fired capacity came online in December at Ressano Garcia, while an emergency open-cycle unit operating in Maputo since early 2015 is supplying 100MW. Speaking in Johannesburg on 15 March, Electricidade de Moçambique (EDM) director of market operations Aderito Manso de Sousa said he expected the 100MW Central Térmica Maputo plant to be converted to combined-cycle operation by October 2018. Japan’s Sumitomo Corporation and IHI Corporation in February signed a contract with EDM for a 100MW-110MW CCGT unit.

While considerable investor attention is focused on gas-fired power plants, and Mozambique is seeking to tap more of its hydroelectric potential, Electricidade de Moçambique (EDM) and associated private investors are focused on developing at least 930MW of new coal-fired capacity. All these projects “have to be done off-balance sheet as EDM doesn’t have the financial strength”, the utility’s director of market operations, Aderito Manso de Sousa, said in Johannesburg on 15 March.

Mozambique’s proposal to restructure bonds guaranteed by the state in an original amount of $850m for Mozambican tuna company Ematum has been met with a downgrade from credit rating agencies Standard and Poor’s and Moody’s. International holders of the bond, which include some of the world’s largest investors, are being asked to exchange some $700m of the existing 2020 Ematum bonds for new sovereign bonds due to mature in January 2023. Credit Suisse and a subsidiary of Russian bank VTB, which arranged the sale of the original $850m bond in 2013, have been hired to arrange the restructuring.

Plans are being accelerated to build a new interconnection linking Mozambique with Zambia and South Africa, Electricidade de Moçambique director of market operations Aderito Manso de Sousa said in Johannesburg on 15 March. A feasibility study for the so-called Mozisa project will be launched soon, he told the Power and Electricity World Africa conference.

Key public and private sector parties have signed a cooperation agreement for the construction of an estimated $6bn natural gas pipeline from northern Mozambique to Gauteng, South Africa. The main signatories are Mozambique’s Empresa Nacional de Hidrocarbonetos (ENH), Profin Consulting, SacOil Holdings and pipeline construction company China Petroleum Pipeline Bureau (CPP).SacOil chief executive Dr Thabo Kgogo described the agreement as a key milestone in the development of the pipeline and distribution project.

Japan’s Sumitomo Corporation and IHI Corporation on 17 February signed a turnkey engineering, procurement, and construction (EPC) contract with Electricidade de Mozambique (EDM) for a 110MW gas-fired combined-cycle power plant in Maputo. Sumitomo said this would be the country’s first gas-fired combined-cycle power plant and, when completed, would meet about 20% of domestic power demand. The plant aims to stabilise power supply to Maputo and the south, which is not connected to the main transmission infrastructure running from Cahora Bassa.

The Ministry of Mineral Resources and Energy has invited expressions of interest from consultants to supply transaction advisory services to help it establish a liquefied natural gas (LNG) industry. The project is being financed from the World Bank’s Mining and Gas Technical Assistance Project. The consulting services include advice and guidance regarding the contractual and commercial aspects of the LNG value chain; developing an economic/financial model of the LNG value chain; modelling the impact of the technical, commercial and contractual negotiation variables during the negotiation; advice and guidance to the government’s LNG negotiating team on economic and financial modelling during the negotiations.