The uncertainties on regulation and the risk of an increase in “resource nationalism” may reduce investors’ interest and postpone investment projects in Mozambique’s oil and liquefied natural gas (LNG) sectors, warns consultancy Business Monitor International (BMI).

The new Petroleum Law, approved last year, “is relatively attractive, but reveals some formalisation of resource nationalism,” BMI said in its ‘Oil & Gas Report’ on Mozambique for the first quarter of 2015, as quoted by news agency Lusa.

“A key takeaway from recent exploration and appraisal work in Mozambique is growing confidence that operators have proven sufficient amounts of gas [exist] to support large LNG export projects,” said the BMI research team.

“However, FDI [foreign direct investment] delays, politics, costs, infrastructure constraints and the ongoing regulatory overhaul are challenges the country will face as it moves from exploration to production,” they added.

The World Bank’s Global Economic Prospects report tags Mozambique as having the largest natural gas deposits in sub-Saharan Africa. “Natural gas fields in the deep waters of Mozambique have reserves higher than in Angola or Nigeria, the two largest oil producers in sub-Saharan Africa,” said the report published this month, highlighting that exports of LNG could start in 2021.

“While the timing of first [exports of] LNG is particularly difficult to pinpoint, we expect Mozambique to make its presence felt in the global LNG market by the end of the decade,” said BMI. “Given continued offshore discoveries and the size of discoveries to date, we expect to see continued growth in proven reserves,” it added.