by Simone Ogno, ReCommon
Article originally published in Domani, 15 March 2024
On her October 2023 trip to Mozambique, Italian PM Giorgia Meloni dedicated a handful of lines to the African country’s agriculture. A sort of preamble for what was to be one of the pilot projects of the so called “Mattei Plan for Africa”, presented in part during the Italy-Africa summit in Rome at the end of January. In reality, at the centre of the October talks with Mozambican President Filipe Nyusi was not agriculture, but energy, so much so that it prompted the Prime Minister to declare that the “flagship” of cooperation between Italy and Mozambique “is the energy sector, especially thanks to the presence of Eni in the area”. A centrality also confirmed by the presence of Claudio Descalzi, Eni’s CEO, on the Senate floor during the Rome summit.
Mozambique is rich in natural resources such as coal and titanium, but it is gas that makes it so attractive to foreign investment. According to the Oil & Gas Journal, it ranks third in Africa for estimated gas reserves, behind only two fossil energy giants such as Nigeria and Algeria. Despite the boom in the hydrocarbons sector over the last ten years, the UN ranks Mozambique in the bottom ten in terms of human development index, with even a downgrade of two positions between 2015 and 2021. With very little economic diversification, it remains particularly dependent on development aid and the fossil fuel industry.
It is the districts of Mocímboa da Praia and Palma that host the main gas operations. Here, off the coast of Mozambique, is the Rovuma Basin. At present, the only completed and operational project is Eni’s floating production and liquefaction platform Coral South FLNG, which export gas from November 2023, while there is already talk of its duplication with the Coral North FLNG platform.
In the same area, but on land, in August 2019 the French giant TotalEnergies began construction – thanks to the engineering expertise of Italy’s Saipem – on the Mozambique LNG project, intended to liquefy and export gas from Rovuma. The rivalry between Eni and TotalEnergies in Cabo Delgado never came to a head: on 26 April 2021, the transalpine company in fact halted work on Mozambique LNG by invoking “force majeure”, due to the armed insurrection that was inflaming the region.
Led by the group known as Ahl al-Sunnah wa al Jamma’ah, the uprising began in 2017 but it was only after three years that it caught the attention of foreign investors. Between August 2020 and March 2021, the insurgents take control of Mocímboa da Praia and Palma, forcing the Mozambican army to retreat: the iconic towns of the fossil fuel industry in the region fall. The organisation Armed Conflict Location and Event Data Project reports that more than 4,000 people have been killed in the last six years, while according to the UN High Commissioner for Refugees there are about 900,000 displaced persons.
In May 2023, TotalEnergies published a report on human rights in Cabo Delgado, commissioned from Jean-Christophe Rufin, former French ambassador to Senegal and one of the founders of Doctors Without Borders. Rufin is clear in asserting that, in Mozambique’s economically poorest province, the widespread sense of frustration among communities impacted by the expansion of the extractive industry is among the factors on which the insurgents can rely. The former ambassador also notes that fossil fuel projects could become the target of terrorist attacks. The Italian Ministry of Foreign Affairs and International Cooperation, approached by the Italian association ReCommon through a request for access to documents, also confirms that there is an “ongoing conflict”, adding that attacks against foreign investments are, however, not “systematic”.
After months of apparent calm, assaults increased in the second half of 2023. A fortnight ago, Ahl al-Sunnah wa al Jamma’ah claimed the deadliest attack against Mozambican troops since 2021, publishing photos of soldiers killed, at least 25. In response, the French Ministry of Foreign Affairs issued a communication in which it “strongly advises against” travelling to Mocímboa da Praia and Palma. And, even more resoundingly, the Confederation of Economic Associations of Cabo Delgado branded Total’s project as “the bearer of misfortune and insecurity”.
What is happening only increases concerns for the safety of the area in view of the resumption of work on Mozambique LNG, strongly desired by Total. A still open game that closely concerns Italy, especially on the financial front.
In such a precarious context, it is difficult for banks to grant loans for project implementation without the involvement of export credit agencies (ECAs). These agencies issue guarantees, i.e. public insurance for the benefit of multinational companies or commercial banks. If something goes wrong, ECAs reimburse the companies or banks that have lent capital for their foreign projects. In both cases with public money.
The Italian ECA is SACE, controlled by the Ministry of Economy and Finance. Between 2016 and 2022, SACE issued guarantees for the implementation of oil and gas projects worth €15.1 billion, making it the leading public financier of fossil energy in Europe. Among these projects are Eni’s Coral South FLNG, with a EUR 700m guarantee, and Mozambique LNG with EUR 950m, for which SACE is expected to cover loans for Saipem’s operations, including one from Cassa Depositi e Prestiti (CDP) worth EUR 650m.
In a legal battle that began in June 2021, the Italian association ReCommon association access to the environmental and social information on which SACE’s evaluation of guarantees in favour of Eni (Coral South) and Saipem (Mozambique) was based. In March 2023, the Council of State, after rejecting the request for suspension, definitively rejected SACE’s appeal against the Lazio Regional Administrative Court’s ruling of May 2022, which recognised ReCommon’s right of access to the documents. The Regional Administrative Court was also forced to appoint a Commissioner ad acta, appointed in May 2023 by the Prefecture of Rome to deliver the documents to ReCommon on behalf of SACE, but eight months later all is silent.
For Mozambique LNG, documents concerns two environmental and social monitoring reports produced between the first assessment in June 2017 and the approval of the guarantee by the SACE Board on 30 September 2019, when the situation on the ground was deteriorating. It is to be expected that more have been produced since the “force majeure” took effect.
Through a mirroring request for access to documents, CDP confirmed the existence of “potential environmental impacts on biodiversity and marine pollution risks” and risks related to “various acts of violence by armed groups”. On the other hand, CDP’s assessment of the environmental and social risks for Mozambique LNG is based on that carried out by SACE, which “informed CDP that the document is not open for disclosure”, confirming that the Italian ECA continues to resist the due course of administrative justice, as if it had something to hide.
In November 2023, the Dutch parliament decided to put the involvement of Atradius – the Dutch equivalent of SACE – in the operation under scrutiny. The legal obstructionism of the Italian agency, its actions, and what is happening in Mozambique seem to go unnoticed by the Minister of Economy and Finance, Minister of Foreign Affairs and International Cooperation, and the Italian Parliament, although there is much more at stake than the use of public money for such impactful projects: a non-predatory relationship with the people of Mozambique, just as the “Mattei Plan” would like.
Original article here
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