The fact that Mozambique has been able to preside over Africa’s biggest-ever financing deal for a project located in what is the epicentre of an increasingly aggressive conflict, with international undertones, to produce a product, liquefied natural gas (LNG), that has been hit hard by the Covid-19 pandemic, is quite astonishing and should not go unnoticed here in South Africa.

The project in question is the $20-billion-plus Mozambique LNG project, being developed by a consortium led by French energy multinational Total, which purchased Anadarko’s 26.5% interest in the project for $3.9-billion in 2019.

Mozambique LNG – the second LNG project in the gas-flush Rovuma basin (the first being Eni’s Coral South floating LNG project) and the first with an onshore terminal – will mine gas from the Golfinho and Atum fields, located in offshore Area 1.

The gas will be processed at a facility, initially consisting of two LNG trains and with a total yearly nameplate capacity of 13.1-million tons, to be built on the Afungi peninsula, near Palma, in the Cabo Delgado province. More than 11-million tons a year of that LNG has already secured customers in Asia and Europe.

The project has attracted $14.9-billion in debt finance from eight export credit agencies, 19 commercial banks, including South African banks, as well as development finance institutions. For perspective, the financing component alone is equivalent to Mozambique’s yearly gross domestic product, while the project’s overall capital cost is a few billion dollars larger.

There is also a view that more projects will follow in light of the discovery of about 150-trillion cubic feet of gas in the Rovuma basin, which extends north to the area offshore Tanzania.

The financing milestone, which was achieved on July 15, means that the scepticism that has abounded in South Africa now has to make way for enterprise.

That’s not to say the opportunities will be simple to access, despite this country’s relative development and proximity to the action.

For one, the conflict is real and the project itself is likely to fuel it further.

Secondly, competition will be stiff as global engineering, logistics and infrastructure companies scour the globe for post-pandemic opportunities.

And thirdly, it is increasingly clear that those companies without a presence (either direct or through partners) in the region will struggle to secure work.

Likewise, it is far from guaranteed that the potential benefits of the mega-investment will flow to Mozambique’s mostly poor citizens. As with all large-scale developments undertaken in conflict zones, the risk of enclaving and corruption is all too real.

That said, the project still has the potential to materially alter the industrial and energy landscape of both Mozambique and the region.

It offers immediate business opportunity for project-starved South African firms and, in the longer run, could help support the region’s energy security and transition, with gas likely to be part of the flexible solutions needed to support higher levels of renewables penetration.