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Mozambique insurgency jeopardises Japan’s energy security

The resource-poor nation’s search for a reliable alternative to the long-delayed recommissioning of nuclear power plants continues

In early August, an Islamist insurgency in the north of Mozambique succeeded in capturing the northern port town of Mocimboa da Praia, just 60km south of the Afungi peninsula, the hub of the southeastern African country’s growing LNG industry.

The insurgency has been around since 2017 but is gaining strength. Mocimboa da Praia, which has fallen and been recaptured before, will most likely be retaken by the government, according to Alexandre Raymakers, a senior analyst at consultancy Verisk Maplecroft in London. But the Ahlu Sunnah Wal Jamaah insurgency is “slowly closing the capability gap and will only become a more formidable adversary in the months ahead”.

Energy security is a long-term problem that Japan has struggled to solve

Simply sending army reinforcements would not address the structural issues in the country that are at the heart of the insurgency, says Raymakers, formerly a security analyst with Nato. Operators will need to “proactively engage with the local community if they wish to somewhat mitigate the risk of being targeted”.

A consortium led by France’s Total agreed an initial $15bn for the development of Mozambique LNG in July. The Japan Bank for International Cooperation will contribute c.$3bn, while Japan’s state-owned Jogmec will provide a further $1.2bn in equity financing.

There is no prospect of Japan’s energy system being squeezed in the short term. The country’s LNG stockpile reached 10-year highs in 2019 and 2020, says Daniel Shulman, principal at consultancy Shulman Advisory in Tokyo. 

In the context of a shrinking population, long-term energy demand is also skewed to the downside. By 2050 electricity demand in Japan could drop more than 20pc versus 2016 and could potentially fall below the level seen in the early 1990s, according to Shulman Advisory analysis.

Still, sustainability of energy supply “will always be something of a moving target”, Shulman says. Japan gets about 45pc of its LNG from Southeast Asia and via the Strait of Hormuz. But Southeast Asia is “not always a walk in the park” and the possibility of conflict hangs like the “sword of Damocles” over the straits. Nigeria and Russia, which together account for nearly another 10pc, bring their own risks, he adds.

Nuclear deficit

Energy security is a long-term problem that Japan has struggled to solve. The country’s oil-fired power plants, Shulman argues, became economically unviable after the 1973 oil shock. The nuclear plants that replaced them became drastically less politically sustainable after the Fukushima accident. The country’s coal plants have in turn become less sustainable in recent months, largely due to international pressure. But Japan is still planning to replace 100 low-efficiency coal plants with high-efficiency ones by 2030—rather than with lower-emission forms of power generation. 

5pc – Share of nuclear power in energy mix

The post-Fukushima spike in LNG use peaked in the mid-2010s at c.43pc of the country’s energy mix, before falling to c.35pc by 2019. The government targets a reduction to 27pc—comparable to pre-Fukushima levels—by 2030. That, however, is premised on nuclear—currently below 5pc of total generation—recovering to at least 20pc.

“This target for nuclear has been bandied about since fairly early in the post-Fukushima decade, and it has proven harder to achieve than the government and the rest of the ‘nuclear village’ had hoped,” Shulman argues. Japan’s Association of Corporate Executives is telling the government it should back off from the 20-22pc nuclear target and settle for 15pc.

Involvement in Mozambique LNG can be seen as a hedge against the risk a substantial nuclear recovery will never materialise, he says. Hedges, though, need to be reliable if they are to reduce risks rather than compounding them. That is far from clear in Mozambique, so Tokyo’s quest continues.

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