Mozambiques-first-grassroots-energy-asset-Arsenio-MABOTE-CMH-1

We will make investments to extend the useful life of our assets and secure a continued positive return for our shareholders.

Arsénio MABOTE Chairman COMPANHIA MOÇAMBICANA DE HIDROCARBONETOS

Mozambique’s first grassroots energy asset

July 9, 2024

Arsénio Mabote, chairman of Companhia Moçambicana de Hidrocarbonetos (CMH), talks to The Energy Year about investing to optimise production from gas reservoirs in Mozambique’s Inhambane province and promoting the use of clean fuels among local communities. CMH is a special purpose entity established to develop the Pande and Temane gasfields.

How does CMH participate in Mozambique’s overall hydrocarbons strategy?
Our core mission is ensuring Mozambican participation in the Pande and Temane gasfields, where we hold a 25% stake alongside Sasol from South Africa, which holds 70%, and the IFC [International Finance Corporation], which holds 5%. We are the first entity in Mozambique to give Mozambicans a chance to obtain shares and participate in a gas asset, which fosters a sense of ownership in our common energy future.
CMH provides sustainable electricity to communities surrounding Pande and Temane, thereby promoting the use of clean energy sources by supplying natural gas as an alternative to biomass. We’re expanding the distribution networks in Inhambane and Maputo provinces, bringing clean gas to businesses and households for cooking, water heating and other needs.
While we explore ways to optimise the exploitation of gas reserves and expand production, we are looking ahead to the future composition of Mozambique’s energy mix. Our clean-burning natural gas generates fewer harmful emissions than traditional fuels and can serve as a bridge in the transition to renewable energy sources.

What advantages can Mozambique leverage in the development of its energy resources?
One of Mozambique’s strong points is that we can develop a very balanced energy mix. Hydropower already plays a major role together with natural gas and there is very good potential for renewables such as solar and wind, with several solar projects currently under implementation. Difficulties still need to be resolved, however, to secure financing for renewables projects.
Looking at gas, Mozambique has vast reserves in Rovuma. The national gas master plan prioritises domestic utilisation, but developing deep-sea reserves is expensive so an LNG anchor project is essential to fund the venture. LNG exports can generate revenue while a portion of production is used for power generation or distributed internally and for industrial use.

 

Where does production currently stand at Pande and Temane?
Since 2004, we have supplied gas for export across Southern Africa and established a vital domestic gas market. Production has been trending upwards since the very beginning. Initially designed for an annual output of 120 million GJ [3.2 bcm], the venture has undergone two expansions to reach a capacity of 197 million GJ [5.3 bcm].
We are currently experiencing a decline in pressure and some reduction in quantities of gas which we need to address. To extend the plateau production rate and maximise the gas recovery, we are taking measures and introducing new technical processes. It is a substantial investment to extend the productive life of the gasfields.

CMH’s profits increased by 75% in 2023. What were the drivers behind this growth?
Like other producers, we have benefitted from the increase in oil and gas prices due to geopolitical factors, but we have also improved our performance by reducing operational costs.
Towards making the best of our profits, we will make investments to extend the useful life of our assets and secure a continued positive return for our shareholders. Investments will also be made towards expanding the grid for domestic distribution.
At CMH, we are committed to ensuring that the Pande-Temane production complex contributes to Mozambique’s economic development and we have been making sure that Mozambican SMEs participate in the business. In recent years, 94% of CMH’s spending has gone to Mozambican companies, excluding OEM components, and almost a quarter of our suppliers are from Inhambane province.

How does Mozambique benefit from CMH having a stronger position within the gas sector?
CMH prioritises social responsibility alongside its core business. Our flagship programme offers subsidised natural gas to communities, drastically reducing their energy costs. We also invest in infrastructure for schools and healthcare facilities, water systems and other projects that directly improve the quality of life of our beneficiaries. Since 2008, more than USD 12 million have been dedicated to social initiatives. To ensure our funds address community needs, CMH has development agreements with local communities which prioritise the most pressing concerns of the people in the area. CMH strives to empower communities, not simply invest in arbitrary projects.

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