Continental Focus, International Reach

Sovereign Wealth Fund for Mozambique

Sunday, March 31, 2019

The government of Mozambique plans to establish a sovereign wealth fund to manage income from future gas production, according to President Filipe Nyusi during a speech given in Maputo on March 27. The country will also allocate a fixed portion of revenue to the state budget to fund infrastructure development, poverty reduction, and economic diversification.

International operators like Anadarko Petroleum and ENI are developing the massive natural gas reservoirs discovered offshore the East African country in the Rovuma Basin through an onshore LNG scheme and an offshore FLNG vessel.

“Savings will serve as a cushion when gas prices are low,” Nyusi said. The state should manage the funds to avoid effects like Dutch Disease, he said, referring to the phenomenon in which a commodity boom makes a country’s currency more expensive and its other goods less competitive.

Nyusi said it is estimated that the Rovuma Basin, where Anadarko and other operators are present, may contain 270 Tcf of natural gas. The US independent is planning to take the FID on the $20-billion project by June. ExxonMobil Corp. plans to make a decision on an even bigger LNG project in the same area by the end of the year.