India-Mozambique Relations: Towards Fresh Opportunities?

Published on 9th August 2015

India’s historic ties with Mozambique have got a boost in recent years with several high level visits from the country including that of Mozambican President in 2013 and the Mozambican Foreign Minister Oldemiro Baloi in November 2014.  These visits are important in terms of India’s growing interest in Mozambique’s energy sector. India is the fourth largest energy importer in the world and has been involved in seeking cooperation with several African countries to meet the growing domestic energy demand. During Baloi’s visit, besides the $ 216.4 million Line of Credit agreement to support development activity in Mozambique, the two countries also signed a Memorandum of Understanding (MOU) to enhance cooperation in the field of natural gas and oil.

Mozambique, a South East African country abutting the India Ocean, has been in the news ever since the discovery of major natural gas reserves in early 2010. There are various estimates on Mozambique’s natural gas resources, the US Energy Information Agency (EIA) suggests that the country contains 279 trillion cubic feet (tcf) equivalent of potential gas reserves.  If these estimates are confirmed, Mozambique may have the fourth largest reserves of gas in the world behind Russia, Iran and Qatar.

Oil and Gas exploration began in Mozambique in the middle of the 20th century and at present the country is producing 155 billion cubic feet (bcf) of dry natural gas from two of its onshore gas fields operated by Sasol, a South African energy company. Most of the recent natural gas discoveries have taken place in the offshore Rovuma basin. As of now, India’s Bharat Petro Resources Limited (BPRL) Oil and Natural Gas Corporation Videsh Limited (OVL) and Oil India Limited (OIL) with combined 30 percent stake dominate the Area I gas field, along with US oil company Anadarko (26.5 percent) which is the operator of the gas field, followed by Japan’s Mitsui and Co. (20 percent), Mozambique’s state owned Empresa Nacional de Hidrocarbonetos (ENH) (15 percent), and Thai state oil company PTT Exploration and Production (8.5 percent).2 Meanwhile, Italian oil and gas major Eni operates the Area IV gas field and owns 50 percent of the stakes, followed by China National Petroleum Corporation (CNPC), Portuguese energy company, Galp Energia,  South Korean national gas company, Kogas and ENH.

While India’s economic engagement and its investments in Mozambique’s energy sector are increasing, it will be prudent to take a balanced view of the opportunities existing in this country. A number of challenges threaten Mozambique’s natural gas boom. First, while the country is sitting on huge gas deposits, it requires huge investments to put the infrastructure required for natural gas production in place. It has been estimated that Mozambique will require investment of over US $30 billion to build capacity to produce 20 million tonnes of Liquefied Natural Gas (LNG). According to ENH, the National Oil Company of Mozambique, the country will start exporting LNG by 2018. Yet there are chances that this deadline may be pushed to 2021.5 

In recent months the falling LNG prices have increased the uncertainty. The prices for natural gas and LNG in particular have been falling due to huge amounts of gas coming from the South Pacific region and South China Sea. At the same time the United States shale gas revolution has resulted in phenomenal rise in gas supplies from the country. It appears that the volatile LNG prices may affect the commercial viability of LNG projects worldwide, including those in Mozambique. This development in turn may lead the oil and gas companies such as Andarko and others to hold off on their final investment decisions as they redesign projects to cut costs and also wait for the gas prices to stabilize.

Second, there is a growing concern over the protection of the emerging energy infrastructure in Mozambique. In the few years there have been reports of rise in organised crime – kidnappings, in particular, in the capital Maputo and other cities. Also the opposition group Resistência Nacional Moçambicana (Renamo) has revived its insurgency 21 years after the end of civil war with the ruling party, Frente de Libertação de Moçambique (Frelimo). They are mainly demanding a share in country’s new found wealth. This rise in instability does not bode well for the country and the nascent energy sector in particular.

Alongside, there are concerns that the country’s natural gas deposits located mainly in country’s northern coast are vulnerable to pirates and other criminals active on the high seas. Mozambique has one of the longest coastlines in Africa however the Mozambican navy (with only one operational patrol boat), does not have the capacity to protect the coast.6 

This provides an opportunity for India to enhance maritime cooperation with Mozambique. The two sides also share the common concern over the issue of safety and security of sea lanes of communication in the Indian Ocean region.  The Mozambican leaders have called for closer cooperation with India in recent years, primarily to keep the waters of Indian Ocean safe and have often expressed the desire to “share and learn” from India.7

India and Mozambique have cooperated on maritime issues in past. Multilaterally, both India and Mozambique as members of Indian Ocean Rim Association (IORA) and also the Indian Ocean Naval Symposium (IONS) have raised their concerns quite often. Bilaterally, India had provided security cover for two important events in Maputo, i.e., the African Union Summit in 2003 and World Economic Forum Summit 2004. In 2010, the Indian navy rescued a Mozambican shipping vessel from pirates off the Mozambican coast. However there is a need for India to step up its security engagement with Mozambique. While a MOU on defence cooperation between the two countries was signed in 2006 and envisages activities such as maritime patrolling of the Mozambique coast, training in military institutions, supply of defence equipment, and also transfer of technology, it is not clear how much progress has been made in these matters.8 

As an energy deficient country India is eying the natural gas bounty in Mozambique; yet it is not alone and increasingly faces competition from the American, European, Chinese, South Korean and South African companies among others. India’s relations with Mozambique are not hinged on commercial ties alone. Development cooperation is high on New Delhi’s agenda with Maputo. In fact Mozambique is the third largest recipient of concessional Lines of Credit from India amounting to $ 649 billion (2002-2013).9 However as more Indian companies increase their presence in Mozambique, New Delhi should join hands with Maputo to the secure the waters across the Indian Ocean.

By Ruchita Beri

The author is Senior Research Associate & Coordinator, Africa, LAC &UN
Institute for Defence Studies and Analyses
New Delhi


1 (Accessed 20 December 2014)

2“OVL to buy Anadarko's 10% stake in Mozambique block for $2.6 bn” Business Standard at (Accessed November 10, 2014)

3Manuel Mucari, “Mozambique sees $30 bln investment for 2018 LNG exports startup” Reuters August 21, 2014, at (Accessed October 14, 2014)


5“Mozambique’s onshore LNG struggling” at (Accessed November 15, 2014)

6Mozambique government in 2013 entered into an agreement with France to supply three patrol boats and three interceptors.However it will take a few years to reach the country.

7“Mozambique, India to work for ’safe’ Indian Ocean” The Indian news, September 30, 2010, at (Accessed November 28, 2014)

8“India and Mozambique to Discuss Piracy” June 24, 2011 , Press Information Bureau, Government of India, at (Accessed November 21, 2014)

9“Visit of Foreign Minister of Foreign Affairs and International Cooperation of Mozambique to India” at releases.htm?dtl/24310/Visit+of+Minister+of+Foreign+Affairs+and+International+Cooperation+of+Mozambique+to+India++November+2329+2014 (Accessed December 4, 2014)

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