The Politics of Domestic Gas: The Sasol Natural Gas Deals in Mozambique

Padil Salimo*, Lars Buur, José Macuane

*Corresponding author

Research output: Contribution to journalJournal articleResearchpeer-review

Abstract

This article explores the ways in which the ruling Frelimo elite in Mozambique engaged creatively with the
opportunities and constraints created by Sasol's Pande and Temane natural gas project as they have evolved from
the early 2000s until today. This is a period that has seen ruling-elite actors become involved in various projects
related to the production of electricity from ‘domestic natural gas’. We argue that focusing on the initial gas
investment and how it evolved over time makes it possible to understand the dynamics related to deal-making
during the formative years when the Mozambican petroleum industry was reformed by separating its commercial
and regulatory functions. More specifically we explore how access to revenues and rents related to
natural gas projects have evolved. We point out that, although the Pande-Temane gas project has increased
revenue generation, most of the gas was sold to the South African major, Sasol, for a very low amount of revenue
during the first phase of the project. Revenues from the second phase, starting in 2012, did not increase dramatically,
even though Mozambique acquired access to 50% of the gas from the extension of the pipeline and
increased production. Instead, the increase in domestic gas allocated to the Mozambican market involved the
allocation and distribution of gas to private companies at special prices, most of which were controlled by
dominant ruling-elite factions under the Chissano and Guebuza governments. We argue that this has been the
main mechanism for the transfer of rents from the public to the private domain.
Original languageEnglish
Article numberVolume 7, Issue 4
JournalThe Extractive Industries and Society
Volume7
Issue number4
Pages (from-to)1219-1229
Number of pages10
ISSN2214-790X
DOIs
Publication statusPublished - 2020

Keywords

  • Mozambique
  • Ruling elites
  • Sasol
  • Domestic gas
  • Rents

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