MOZAMBIQUE A CURSE FOR THE COUNTRY - A WINDFALL FOR THE INDUSTRY, Friends of the Earth International

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GAS   IN
MOZAMBIQUE
A WINDFALL FOR THE INDUSTRY,
 A CURSE FOR THE COUNTRY
France thrusts Mozambique into the fossil fuel trap
JUne 2O2O
EXECUTIVE SUMMARY
          Mozambique: a fossil fuel windfall                             for the official purpose of assembling a tuna fishing
          amid scandal and corruption                                    fleet. In fact, the Mozambique government illegally
                                                                         contracted debts to finance defence programme, to
          Between 2010 and 2013, huge gas deposits were
                                                                         secure sovereignty over its exclusive economic zone
          discovered in Mozambique. Around 5 trillion cubic
                                                                         and the fossil fuel deposits within it. The affair also
          meters were found, making this the 9th largest
                                                                         involved bribery and several high level actors, including
          gas reserve in the world. Over the coming years,
                                                                         the former Mozambican Finance Minister Manuel
          a projected minimum of 60 billion USD is set to
                                                                         Chang and Credit Suisse bankers, have since been
          be invested in the exploitation of these reserves,
                                                                         prosecuted for corruption and fraud. This colossal
          amounting to the largest investment ever made
                                                                         debt now keeps Mozambique dependent
          in Sub-Saharan Africa. A dizzying sum, representing
                                                                         on the transnational corporations and foreign
          more than half of the amount required to face the
                                                                         powers exploiting these reserves, and the related
          coronavirus challenge across the continent, according
                                                                         gas revenues, even despite the highly unequal
          to an estimate by African finance ministers.
                                                                         contracts granted to the gas industry.
          This investment would be 50 times the money
          collected by the UN to fund reconstruction efforts
                                                                         French machinations
          in Mozambique after the ravages of tropical
          cyclones Kenneth and Idaï in 2019.                             France was determined for its own transnational
                                                                         corporations to be the first to profit from this
          The sandy beaches of Cabo Delgado province, in the             fossil fuel windfall, even at the cost of creating
          far north of Mozambique, have become a pot of gold             chaos in Mozambique. As early as 2013, the French
          for the gas industry and any company with a potential          government appears to have turned a blind eye to
          stake in massive energy projects. However, this                the dubious aspects of this naval contract, raising
          ‘windfall’ is already proving a curse for the population       Mozambique’s debt ratio and implicating itself in
          of Mozambique, especially for local communities                corrupt practices. France’s aim was not only to save
          caught up in an increasingly violent conflict.                 the financially-troubled Cherbourg shipyards (CMN),
                                                                         but also to export other kinds of arms and reinforce
          Even before the gas projects were formalised, France           Mozambique’s navy so that it was equipped to
          played the lead role in a corruption scandal related           protect future gas infrastructures. At the time, major
          to oil and gas exploitation, which flung Mozambique            French energy companies were already vying for the
          into deep economic and financial crisis in 2016.               immense oil and gas reserves. Some were even already
          In 2013, the Mozambican government signed a                    conducting research in the Rovuma basin. This is a
          dubious contract with Constructions Mécaniques de              highly strategic region for France, which controls
          Normandie (CMN), a French company belonging to                 two thirds of the Mozambique Channel, an exclusive
          French-Lebanese billionaire arms dealer Iskandar Safa,         economic zone for France thanks to the position of

GAZ IN MOZAMBIQUE A WINDFALL FOR THE INDUSTRY, A CURSE FOR THE COUNTRY                                                               2
the Scattered Islands, subject of a sovereignty dispute        strategy of militarisation, prioritising protecting gas
          between France and Madagascar.                                 infrastructure, at the expense of local communities.
          Since then, the dreams of these French companies               The major gas operators even paid the Mozambican
          have come true, with a great deal of help from public          government to mobilise more armed forces troops
          authorities. A myriad of French companies in the fossil        to protect them. Nothing is being done to act on
          fuel industry and adjacent sectors, such as logistics          the root political and social causes of the conflict.
          and private security, are now involved in the three            On the contrary, the militarisation of the zone and
          gas projects underway off the coast of Mozambique.             the gas operations help feed the underlying tensions
          For several years now, the entire arsenal of French            perpetuating the violence. Human rights violations
          economic diplomacy has been working to defend                  are on the rise, as the communities find themselves
          French interests in Mozambique: diplomatic missions            caught between the insurgents, the army, private
          attended by heads of industry, public funding, business        security contractors and the gas companies and
          conventions, the use of the embassy’s economic                 their subcontractors. Communities are being robbed
          services. Diplomatic efforts have ramped up since the          of their lands, their access to the sea and their
          arrival of Total in September 2019, taking over from           livelihoods. Those who try to get word out about the
          Anadarko as the main operator of the Mozambique                situation, such as journalists and community activists,
          LNG mega project. The French government even                   are being intimidated by government forces and some
          opted to support one of the gas projects financially,          of them have disappeared. For example, journalist
          by granting an export guarantee of over half a billion         Ibrahimo Abu Mbaruco has been missing since 7 April
          euros to aid its completion. More public financial aid of      2020, with his last message being a text to a colleague
          this kind may soon be granted. The four largest private        saying that soldiers were coming towards him.
          French banks are also deeply involved : Crédit Agricole
          and Société Générale are the major players, acting as          Given these circumstances, and with the arrival of
          financial advisors to the gas operators.                       Total, French economic diplomacy has been backed
                                                                         by increased military cooperation between the two
          Cabo Delgado, a province erupting                              countries. Instead of encouraging the Mozambique
          in violence                                                    government to move towards conflict resolution
                                                                         strategies that attack the root causes of the violence,
          Since October 2017, insurgent attacks have been
                                                                         France is helping ignite tensions in Cabo Delgado
          on the rise in northern Mozambique. The violence
                                                                         province by supporting multinational gas companies
          has resulted in the deaths of at least 1,100 people,
                                                                         and the militarisation of the zone. French-made
          predominantly among local communities. Over
                                                                         weapons have even been found in the hands of
          100,000 people have been displaced. The insurgency,
                                                                         paramilitary organisations fighting the insurrection,
          allegedly associated with ISIS and Al-Shabab, has
                                                                         including that of Erik Prince, former head of the
          fed on a morass of social, religious and political
                                                                         US mercenary company Blackwater, well known for
          tensions, exacerbated by the rising inequality and
                                                                         its disastrous operations in Libya and Afghanistan.
          human rights violations that have arrived with the
                                                                         With the failure of the Mozambican army, private
          gas projects. Confronted with this situation, the
                                                                         security companies from Russia, the United States,
          Mozambique government, abetted by foreign powers
                                                                         South Africa, and also France, have had an increasing
          and transnational corporations, has opted for a
                                                                         presence in Cabo Delgado. French-licensed helicopter

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gunships operated by South African mercenaries                 Climate Convention that France’s desire was to help
          even injured six children during a counter-insurgent           Mozambique avoid becoming dependent on gas. In
          attack in late May 2020. In the meantime, French               complete contradiction to his words, his country
          banks continue to claim to work only with operators            is pushing Mozambique into that same trap of gas
          that uphold human rights and that the agreements to            dependence, in the name of the economic interests
          protect the gas infrastructures help to protect local          of French energy industrials and bankers. And as fate
          communities. These claims are totally hollow.                  would have it, Mozambique is on the front line of
                                                                         climate change impacts, being ranked as one of the
          Mozambique is descending into the chaos of                     most vulnerable countries and having been hit by
          the ‘resource curse’ with help from the French                 two devastating cyclones just over a year ago. Energy
          government and French multinationals. The gas boom             sovereignty for the peoples of Mozambique is critical,
          has come with increased conflict, violence, corruption         and can be achieved only through people-based,
          and social inequality, a continuation of the evils that        renewable energy solutions, not through fossil fuels
          fossil fuels have provoked in so many other countries,         which serve only corporate profits.
          especially in Africa. The major gas companies are in a
          position of power and can set the rules and grab the           To end the hypocrisy, the French government must
          profits. They have circumvented the already weak laws          cease this diplomacy of chaos, practiced in the
          on ‘local content’ designed to enable wealth creation          interest of the fossil fuel and arms industries. Now
          in Mozambique, laws which are apparently of little             is the time for the French government to implement
          concern to the Mozambique government.                          social distancing from fossil fuel industry lobbies.
                                                                         First, they must stop providing export aid to projects
          Detonating a climate bomb:                                     such as this one, which are not only ticking climate
          French government hypocrisy                                    bombs but also lead to human rights violations. This is
                                                                         the second scandal uncovered in two years involving
          Not only does the gas boom spell chaos for
                                                                         foreign gas projects guaranteed by the French
          Mozambique, French machinations are forcing
                                                                         government. After the Total facility in Yemen was
          yet another African country into dependency on
                                                                         found to be housing a secret prison, now it is the gas
          fossil fuels, which climate science tells us must not
                                                                         projects in Mozambique causing disastrous damage.
          be exploited at all. The three gas projects under
                                                                         It is time for the government and parliamentarians to
          development could release as much as the equivalent
                                                                         take stock of the climate emergency and the human
          of seven times France’s annual greenhouse gas
                                                                         rights and environmental violations associated with
          emissions, and 49 times Mozambique’s current national
                                                                         the projects they support, and change the law this
          annual emissions. This is a ticking climate bomb ready
                                                                         year to cease all subsidies to the oil and gas sector
          to explode and will contribute to pushing the world
                                                                         from 2021 onwards. French companies, including
          even further towards the irreversible climate crisis.
                                                                         private banks and energy companies like Total, must
                                                                         immediately put an end to their involvement in gas
          Yet these projects represent only part of the fossil
                                                                         projects in Mozambique, or risk being found liable for
          fuel reserves discovered. In January of 2020, French
                                                                         breaching the French duty of vigilance law.
          President Emmanuel Macron told the Citizen’s

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TIMELINE
              FRENCH ECONOMIC                       WEAPONS SALES &                ENVIRONNEMENTAL AND              CORRUPTION
              INTERESTS                             MILITARY COOPERATION           SOCIAL IMPACT                    SCANDAL

     2010 to 2013                                            2015                                        2017
              Huge gas reserves were                                          July                               June
              discovered in Mozambican                                        Former Defence                     An auditor’s report
       territorial waters north of the                         Minister, Filipe Nyusi, freshly            confirmed that funds were
       country. The French companies                           elected President of Mozambique,           misappropriated and that the
       Technip and Schlumberger were                           chose France for his first diplomatic      financial set up of the loan was
       involved in the exploration.                            trip outside of Africa. No press           chiefly designed to fund a defence
                                                               conference was held between                programme in connection with the
                                                               the two heads of State, so as to           offshore gas and oil industry, where
     2012                                                      avoid bringing up the question             the Mozambican government had
                                                               of the naval contract, at a time           promised to make repayments with
               September
                                                               when suspicions of corruption              income from the gas industry.
               Total established itself
                                                               over the deal were increasing in
       in the Rovuma Basin, off the coast
                                                               Mozambique. However, discrete                     The final investment decision
       of Mozambique, by buying shares
                                                               lunches took place with Emmanuel                  was taken for Coral South
       in oil blocks.
                                                               Macron, then Minister for                  FLNG, the first gas project planned
                                                               the Economy and with French                off the coast of Cabo Delgado
                                                               business leaders.                          province. The project was partly
     2013                                                                                                 financed by Crédit Agricole, also
              September                                                     October                       acting as the project’s financial
              A public fishing company                                      French government             advisor along with other French
       in Mozambique bought 30 ships                           representatives in the Mozambique          banks BNP Paribas, Société
       from Iskandar Safa’s Cherbourg                          Channel visited Maputo. Among              Générale and Natixis.
       shipyards (CMN), in a contract                          them was a military commander
       much celebrated by the French                           who had come to assist the                         October
       government.                                             Mozambican navy, following                         The first attack by a group of
                                                               the purchase of naval vessels              insurgents, which the government
                      The Mozambican                           from France.                               said was known as Ahlu Sunna
                      Deputy Minister for                                                                 Wa-Jama, in Cabo Delgado. The
       Foreign Affairs announced that                                                                     first attacks came at the same
       the six oil tankers in the 30-ship                    2016                                         time as the financial formalisation
       “fishing” fleet should be armed                                                                    of the first gas projects, which
                                                                      April
       and that negotiations had begun                                                                    exacerbated the social, religious,
                                                                      The “tuna bonds” scandal
       with France. The same year,                                                                        ethnic and political tensions, at the
                                                               erupted. The Mozambique
       France exported 12.3 million                                                                       heart of the degenerating conflict.
                                                               government had contracted
       euros in military equipment
                                                               hidden debts, in the form of State
       to Mozambique.                                                                                            4th quarter of 2017
                                                               backed loans, with the collusion
                                                                                                                 The French government
                                                               of Iskandar Safa’s company.
                                                                                                          provided over half a billion euros
                                                               The banks that organised the
     2014                                                      transaction, including BNP Paribas,
                                                                                                          in financial support to the oil
                                                                                                          company TechnipFMC for work
              June                                             Credit Suisse and VTB Bank
                                                                                                          as a contractor for the first gas
              France reopened its                              International, froze financing,
                                                                                                          project Coral South FLNG.
       economic service at the French                          throwing the country into
       embassy in Mozambique.                                  economic and financial crisis.
                                                                                                                        December
       The French Minister for Foreign
                                                                                                                        Erik Prince, founder of
       Trade visited Pemba, near the
                                                                                                          the notorious private security firm
       gas reserves, accompanied by
                                                                                                          Blackwater, created a company in
       a delegation of industry heads,
                                                                                                          Mozambique and acquired military
       including those in oil and gas.
                                                                                                          vessels from CMN, used to provide
                                                                                                          security for the gas facilities.
GAZ IN MOZAMBIQUE A WINDFALL FOR THE INDUSTRY, A CURSE FOR THE COUNTRY                                                                             5
18 days prior to the presidential      Ibrahimo Abu Mbaruco has been
     2018
                                                               elections in Mozambique, enabling      missing since 7 April, after soldiers
              November                                         Nyusi to announce to the media         surrounded his home.
              Potential gas revenue was                        that the country had received
       at the heart of the Mozambique                          880 million dollars in government             French-licensed combat
       government’s debt restructuring                         revenue.                                      helicopters start being used
       negotiations with its creditors.                                                               by South African mercenaries from
       Gas exports have become the only                                                               the private military company
       way to repay the public debt that                     2020                                     Dyck Advisory Group (DAG)
       skyrocketed following the scandal.                                                             to fight the insurrection.
                                                               January
                                                               Emmanuel Macron stated before
                                                                                                             With the drop in petrol
     2019                                                      the Citizen’s Climate Convention
                                                                                                             prices, the final investment
                                                               that France must help Mozambique
              January                                                                                 decision for the Rovuma LNG
                                                               to avoid becoming dependent
              An attack took place in                                                                 project was pushed back.
                                                               on fossil fuels: “The problem we
       Maganja, just 7km from the Afungi                                                              Crédit Agricole remains the
                                                               are going to face collectively, is
       gas site. Mozambican soldiers                                                                  financial advisor for the project
                                                               explaining to poor countries where
       did not intervene, arguing that                                                                development.
                                                               deposits are discovered, that we
       their orders were to protect the                        need to do without fossil fuels.
       gas facilities only. Milamba locals                                                                  May
                                                               [...] For example, Mozambique,
       living near Maganja fled to Palma.                                                                   Total’s gas site became
                                                               which has discovered rich deposits
       During the time they were absent,                                                              the epicentre for the spread
                                                               in its waters. The country is
       a subcontractor for the major gas                                                              of Covid-19 in Mozambique.
                                                               now exploiting these deposits,
       companies took the opportunity                          sometimes with French operators.
       to grab their lands and begin                                                                        During the Battle
                                                               [...] Compensations must be found
       construction works on                                                                                of Macomia, six children
                                                               in the international economy
       an aerodrome.                                                                                  were wounded by DAG helicopter
                                                               to help them withdraw and make
                                                                                                      gunships. These are the first civilian
                                                               them less dependent.”
             February                                                                                 casualties directly related to the
             Anadarko (then operator                                                                  involvement of private military
                                                                              February
       of Mozambique LNG, replaced a                                                                  companies in Cabo Delgado,
                                                                              French Minister for
       few months later by Total) and                                                                 and probably not the last.
                                                               Foreign Affairs, Jean-Yves le Drian,
       ENI/ExxonMobil signed an                                carried out a diplomatic mission
       agreement with the Mozambican                                                                         June
                                                               to Mozambique to defend French
       Defence Minister for paying the                                                                       The signing ceremony for
                                                               fossil fuel industry interests, both
       government to deploy more                                                                      the closing of the 24 billion dollar
                                                               through finance and security.
       troops to protect their facilities.                                                            financing for Total’s Mozambique
                                                               With the civilian death-toll rising,
       The money was paid into a special                                                              LNG mega project is expected
                                                               Total and ExxonMobil asked
       account, arousing suspicions.                                                                  to take place. The French banks
                                                               the Mozambique government
                                                                                                      BNP Paribas, Crédit Agricole,
                                                               to deploy 300 extra soldiers
              March / April                                                                           Natixis and Société Générale,
                                                               around their facilities.
              Tropical cyclones Kenneth                                                               also a financial advisor, will
       and Idaï devastated parts of                                                                   provide loans.
                                                                     March
       Mozambique. They were the most                                French private security
       violent cyclones ever to hit                                                                         October
                                                               company Amarante Internationale
       Cabo Delgado province.                                                                               Business France
                                                               opened a branch in Maputo and
                                                                                                      (a government agency for
                                                               responded to the call for tenders
             August                                                                                   economic diplomacy) is organising
                                                               launched by Total to secure their
             Combat helicopters still                                                                 a networking event, called “French
                                                               gas facilities.
       covered in French army camouflage                                                              Gas Days”, in Maputo to help
       were seen in Pemba, operated                                                                   French companies secure shares
                                                                      April
       by South African paramilitary                                                                  in markets directly linked
                                                                      According to the NGO
       groups.                                                                                        to the gas boom.
                                                               ACLED, the insurrection has killed
                                                               1,100 people in Cabo Delgado since
             September                                         October 2017. Over 100,000 people
             Total became the main                             have been displaced. Those who try
       operator of Mozambique LNG,                             to raise awareness of the situation
       buying out Anadarko’s Africa assets.                    are intimidated or kidnapped by
       The transaction was completed                           government forces. Journalist

GAZ IN MOZAMBIQUE A WINDFALL FOR THE INDUSTRY, A CURSE FOR THE COUNTRY                                                                         6
GAs   IN
                                                Report released in June 2020 by Les Amis de la Terre France,
                                                Justiça Ambiental (JA!/Friends of the Earth Mozambique)
                                                and Friends of the Earth International.

                                                WRITING Cécile Marchand (Les Amis de la Terre France)
                                                EDITING Catherine Mollière, Lorette Philippot, Juliette Renaud,

MOZAMBIQUE
                                                Marion Cubizolles (Les Amis de la Terre France), Dipti Bhatnagar,
                                                Sara Shaw, Madeleine Race (Friends of the Earth International),
                                                Anabela Lemos, Ilham Rawoot, Daniel Ribeiro (JA!/Friends of the
                                                Earth Mozambique), Tony Fortin (L’Observatoire des Armements).
A WINDFALL FOR THE INDUSTRY,                    LAYOUT Zelda Mauger PHOTO Christophe Sales
A CURSE FOR THE COUNTRY

Friends of the Earth                 The federation of Friends of            Justiça Ambiental (JA !) /
International is the world’s         the Earth France is a non-profit        Friends of the Earth
largest grassroots environmental     environmental and human rights          Mozambique is a leading
network with 73 member groups        network, independent from any           Mozambican non-profit
and over two million members         religious or political influence.       organization working to reduce
and supporters around the            Created in 1970, they helped            the environmental and social
world. Our vision is of a peaceful   build the French ecological             impacts of Mozambique’s
and sustainable world based on       movement and helped found               unsustainable development,
societies living in harmony with     the world’s largest grassroots          and trying to create new
nature. We envision a society of     environmental network, Friends          sustainable systems. We aim to
interdependent people living in      of the Earth International.             build awareness and solidarity
dignity, wholeness and fulfilment    Friends of the Earth France             in vulnerable grassroots
in which equity and human and        forms a local network gathering         communities and support
peoples’ rights are realised.        30 autonomous local and                 communities and civil society
This will be a society built         associated groups that act              by providing strategic and
upon peoples’ sovereignty and        according to their own priorities       technical advice, research,
participation. It will be founded    and support the national and            information, capacity-building,
on social, economic, gender          international campaigns with            and movement-building. We
and environmental justice            a shared vision for social and          seek to build the community
and be free from all forms of        environmental justice.Friends           voice by facilitating links
domination and exploitation,         of the Earth France promotes            between communities
such as neoliberalism, corporate     solutions at the local, national        facing similar environmental
globalisation, neo-colonialism       and international level that will       situations, supporting
and militarism. We believe that      help to create environmentally          community campaigns including
our children’s future will be        sustainable and socially just           understanding their human
better because of what we do.        societies.                              rights, land rights and the
                                                                             Constitution, providing access
                                                                             to government and decision-
 foei.org                             amisdelaterre.org
                                                                             makers, access to media and
                                                                             by internationalizing local
                                                                             community struggles. We are
                                                                             committed to a better, safer
                                                                             and healthier environment for
                                                                             Mozambique, for the world
                                                                             and for current and future
                                                                             generations.

                                                                               ja4change.org
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