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Mozambique’s economy expected t benefit from production of liquid fuel from natural gas

Units planned in Mozambique to produce refined fuel may increase the impact natural gas has on the economy by reducing fuel imports and even launching exports within the region.

Whilst units to produce liquid natural gas (LNG) for export have been the focus and have projects already at an advanced stage, plants to transform the gas into liquid fuel (GTL) offer the capacity to supply the domestic and regional markets with diesel, synthetic fuel and other refined fuels.

According to the Economist Intelligence Unit (EIU) in a report on the Mozambican economy this kind of production “brings more benefits to the domestic economy in terms of job creation, industrial activity and eliminating the cost of expensive energy imports.”

The development of these units “will allow Mozambique to add value to the gas resources,” that have been recently discovered in the Rovuma basin rivalling the world’s largest reserves, with “great industrial, commercial and budgetary impact,” beyond 2018 when production is due to begin, the EIU said.

Last month Mozambican state oil and gas company Empresa Nacional de Hidrocarbonetos (ENH) agreed with South African group Sasol and Italy’s ENI to carry out a pre-feasibility study for construction of a GTL plant, fed on natural gas from the Rovuma basin, in Cabo Delgado province, which is expected to have initial capacity to produce 96,000 barrels of liquid fuel per day.

ENH and ENI are partners in the Area 4 block of the Rovuma basin and Sasol is developing the Pande and Temane natural gas project with ENH. Sasol has the technology to transform natural gas into liquid derivatives.

“Setting up a project of this kind will allow the country to produce liquid fuel from gas, such as lighting oil, for example, and reduce dependence on imports,” said the chairman of ENH, Nelson Ocuane.

At the end of June, Royal Dutch Shell signed another agreement with ENH, which led to a pre-feasibility study being launched for a GTL unit.

Shell built the first commercial GTL plant in Bintulu, Malaysia, and in 2011, with it partner Qatar Petroleum, launched production at the world’s largest GTL factory, Pearl GTL, in Qatar.

The studies will allow Sasol and Shell to estimate the investment needed to build the units and a schedule for the projects, allowing Mozambique to diversify the potential uses of natural gas, which is a “positive development,” according to the EIU.

Construction of these units is part of the “Master plan for natural gas” which was drawn up with the assistance of the World Bank and approved by the Council of Ministers at the end of June, with the aim of speeding up industrial development via the use and local processing of energy resources.

The plan also includes construction of an oil pipeline linking Cabo Delgado to Maputo, in southern Mozambique.

Production of fuels from coal also recently raised the interest of some foreign investors, such as Clean Carbon Industries, which at the end of 2012 announce plans to invest US$1 billion in a coal-to-fuel plant.

Hugh Brown, who presented the project at a meeting with government of Sofala province, said that the plant was expected to start operating I 2015 and would produce gasoline, diesel and aviation fuel, known as “Jet A1″.

The pre-feasibility studies showed that the plant would produce 65,000 barrels of fuel per day, allowing Mozambique to save up o US$300 million as well as securing a fuel supply. (macauhub/MZ)

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