March 7, 2024

Natural Gas In Africa Amid A Low-Carbon Energy Transition: A Case Study of Mozambique and Tanzania

Mozambique and Tanzania both have substantial gas reserves, but development of the countries’ gas industries has been hampered by political and economic factors. Looking ahead, future global action on climate change poses the risk of new infrastructure in both countries being stranded, due to declining gas markets and prices, as well as declining capital availability and increasing hurdle rates being sought by investors for fossil-fuel infrastructure.

The risk for these Mozambique and Tanzania, however, is not only limited to scenarios that focus primarily on exports. The overall economics and resilience of LNG projects in these countries would be negatively impacted where domestic gas-led industrialisation is pursued using gas from assets that depend on higher export prices for their economic viability. Even in cases where domestic gas-led industrialisation does not conflict with exports, using gas as a fuel in power and industry is still likely to be an expensive option.

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