Chevron finds treasure and trouble with rebel-hit gas in Mozambique

By Paul Burkhardt and Matthew Hill sure 04/14/2019

JOHANNESBURG and MAPUTO (Bloomberg) – "Great power involves great responsibility," said Uncle Ben in Marvel Comic's famous hit movie, Spider-Man (2002). The acquisition of Anadarko Petroleum Corp. by Chevron Corp. gives it access to the popular Permian Basin, in addition to one of the largest discoveries of natural gas in Africa in the last decade. It also exposes the company to security risks when Islamist insurgents intensify their attacks in northern Mozambique, where the deposits are located.

The liquefied natural gas project developed by Anadarko since the discovery of gas in the Rovuma basin in 2010 will generate $ 130 billion in revenue over its lifetime, according to the Mozambique Ministry of Finance. Of this amount, project owners will receive $ 38 billion after taxes and costs, the ministry said in June.

This manna, however, has a disadvantage. Anadarko has already been involved in the conflict in northern Mozambique. In February, suspected militants fired on a convoy of the company, beheaded one of its subcontractors and injured six people.

"With this acquisition, Chevron is taking over the exposure to Anadarko's portfolio," said Nick Branson, an analyst at Verisk Maplecroft, a research firm based in Bath, England, in an e-mail response to questions. "Mozambique's assets will increase its overall exposure to business risks."

Insurgent attacks have increased in recent months, according to data compiled by the United Kingdom-based data project on events and armed conflict. They could still intensify in the run-up to the October general election, Branson said.

Anadarko "did a good job advancing the project," Chevron spokesman Kent Robertson said in a text message. "The team they have assembled is very competent and we hope the project will come to fruition".

Anadarko did not respond to requests for comment.

Yet, Chevron has experience in dealing with conflicts on the continent. It is one of the biggest producers in Nigeria, the biggest source of oil on the continent, where militants have been sabotaging, kidnapping and stealing for decades.

The $ 20 billion Anadarko project will be the largest investment in African history, according to the South African lender group Standard Bank. The onshore LNG processing plant of Exxon Mobil Corp. located nearby will likely start producing shortly after Anadarko and will be even larger.

"The announcement can only be positive for Mozambique," said Paul Eardley-Taylor, head of oil and gas activities at Standard Bank for Southern Africa. "He's bringing in a well-capitalized international oil company with recent and extremely relevant experience" with major LNG facilities, he said.

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