BUSINESS MAVERICK: Mozambique’s $20bn gas project: A boom that heralds a resource curse bust?

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BUSINESS MAVERICK: Mozambique’s $20bn gas project: A boom that heralds a resource curse bust? By Ed Stoddard

If ever there was a candidate ripe for falling under the spell of the “resource curse”, it would be Mozambique. It is in the process of becoming bewitched thanks to the $20-billion gas investment announced this week by Anadarko, which in turn is being taken over by Occidental Petroleum Corp. When that deal is done, Occidental has agreed to sell assets including the Mozambique LNG project to French oil major Total SA.

An impoverished country with a history of conflict, graft and poor governance is much more likely to be cursed by a resource windfall than a mature, affluent democracy with a diverse economy. Think of Norway, which has transformed its oil revenues into a $1-trillion sovereign wealth fund. Jon Lawrence, an analyst with Wood Mackenzie’s sub-Saharan Africa upstream team, was quoted by Reuters as saying:The government also has an apparent Islamic insurgency on its hands in the gas-rich province of Cabo-Delgado. The World Bank notes:While localised, the risk that it will spread to other areas of the province and the country should not be underestimated.” Think of the Islamic insurgencies in Nigeria’s north, which has long felt excluded from the country’s oil windfalls.

 

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