Inside the controversial $20 billion Mozambique mega gas project

As global attention continues to focus on the humanitarian repercussions and environmental fears associated with fossil fuel extraction, the $20 billion liquefied natural gas (LNG) project in Mozambique’s Cabo Delgado region has become a spotlight of contention.

Stakeholders from various corners have raised alarm bells, calling for the UK government to withdraw its financial backing for the initiative. With the backdrop of grave human rights violations and ecological concerns, the debate surrounding this mega gas project is far from simplistic.

The Mozambique LNG project was initially heralded as a groundbreaking opportunity for economic development in one of the world’s poorest nations, following the discovery of around 180 trillion cubic feet of natural gas reserves off its coast in 2010. This find sparked hopes that Mozambique could evolve into the “Qatar of Africa,” with the International Monetary Fund (IMF) projecting a staggering 34 percent growth in GDP by 2021. However, the reality has been starkly different: actual growth hovered around a mere 2.5 percent, stymied by violence and political instability in the region.

A wave of humanitarian crises has engulfed Cabo Delgado since 2017 as Islamist insurgents launched a campaign of terror, resulting in the deaths of approximately 6,000 people and the displacement of over 600,000. The violence took a rediscovered level of international attention in 2021 when an ISIS-affiliated militant group trapped 183 contractors in a hotel, leading to at least ten deaths as they attempted to escape. Among those affected was British national Philip Mawer, whose death underscored the perilous conditions surrounding the project.

The landscape has only become more complicated for Mozambique LNG with the recent release of a letter from Oil Change International (OCI). This campaign group asserts that the potential $1.15 billion investment by UK Export Finance (UKEF) contravenes the UK’s commitment to human rights and environmental standards. Following a pledge to end public financing for fossil fuel projects abroad during the COP26 climate summit, continued backing for Mozambique LNG appears paradoxical.

Campaigners are right to sound the alarm. The local populace’s grievances tell a story of dispossession and neglect. As the project initiated land acquisition for its liquefaction terminal, many villagers claim they were never adequately compensated for the land they surrendered. Local residents, like Neto Agostino Paulo from Macala Village, express disillusionment—promises of compensation have turned into unfulfilled hopes, pushing communities deeper into economic precarity.

In a gripping counterpoint, TotalEnergies, the French energy corporation at the helm of the project, maintains that the situation is far more nuanced. The company asserts it has provided emergency assistance and has mobilized resources to evacuate over 2,500 individuals—civilians, employees, and subcontractors—during the height of violence. A spokesperson remarked that prior to the “force majeure” declaration in March 2021, the company had paid 89 percent of compensation payments within six months of signing agreements.

Inside the controversial $20 billion Mozambique mega gas project.

However, many advocacy groups argue that these corporate statements obscure a deeper reality—one characterized by a “resource curse” where wealth from natural resources paradoxically heightens local suffering. This phenomenon has been highlighted in various countries across Africa, such as Nigeria and Angola, where resource wealth has often led to increased corruption and inequality.

The pessimism surrounding Mozambique LNG is underscored by a complementary narrative regarding the global market for LNG—especially following Russia’s invasion of Ukraine. Increased LNG capacity planned in the U.S. and Qatar has saturated global markets, leading analysts to express skepticism about Mozambique’s ability to compete. Indeed, Simon Nicholas from the Institute for Energy Economics, Japan (IEEFA), warns that if the project ever comes to fruition, it may only add supply to an already overstocked market.

A broader analysis reveals that the structural deals established by TotalEnergies may not only jeopardize local economic benefits but could also mean Mozambique’s potential gas revenues may lag significantly behind initial projections. Reports indicate that Mozambique is likely to see only 20 percent of estimated revenues due to the global energy transition, further exacerbating social disparities in the region.

Adding to these concerns, laws governing investor-state dispute settlements (ISDS) afford foreign investors significant advantages, often at the expense of the nation’s sovereignty. Analysts caution that such arrangements may hinder Mozambique’s ability to enact necessary reforms aimed at sustainable economic development. Daniel Ribeiro, a local activist, voices grave concern about the potential “stabilization clauses” tied to investments, which may bind the country to fossil fuels for years to come.

Despite compelling arguments for halting the project, the Mozambican government is reluctant to abandon the deal. Years of debt have escalated since the discovery of gas, with borrowed funds tied to anticipated future revenues. This precarious fiscal landscape was further complicated by controversy over governmental corruption, whereby politicians misappropriated loans for personal gain.

This complex interplay of economic, humanitarian, and environmental concerns has led to a distinct inability for stakeholders—both local and international—to see a clear way forward amid escalating violence and daunting financial risks. Additionally, women’s rights and socio-economic vulnerabilities stand on dangerous ground, as the impacts of violence ripple through communities.

Beyond the financial aspect of the project, the resurgence of the insurgency raises profound questions about the future of Cabo Delgado and its residents. While much of the landscape has shifted since TotalEnergies seeks to restart the project, the underlying issues that allowed for insurgency recruitment and local grievances remain largely unaddressed. Indeed, the presence of violence and instability continues to loom large, impeding prospects for sustainable development.

Despite the potential for financial gain, many local experts argue that Mozambique should seek alternative pathways towards renewable energy development, which could offer a more sustainable route to economic upliftment. A lack of electricity access is a stark reality for many in Mozambique—about 60 percent of the population remains in the dark.

In the context of the ongoing crises, calls for governmental action are amplified. As the situation unfurls, it is undeniable that the decisions made in the coming months will reverberate for years to come. For activists like Ribeiro, the best option is to discontinue engagement with the Mozambique LNG project entirely. Pulling out, they argue, may prompt the nation to pivot from a destructive cycle of dependence on fossil fuels towards investments that genuinely serve the populace and the environment.

Ultimately, as negotiations around the $20 billion Mozambique LNG project continue, the stakes remain high not only for investors but also for the millions of lives interconnected with the region’s fate. Each decision carries with it the weight of consequences, ranging from the local to the global scale, urging all stakeholders to confront the contradictions embedded within the project’s promise and peril.