Islamist militants occupied a key port in gas-rich northern Mozambique on Wednesday following days of renewed attacks, a military source and local media said.

"The port of Mocimboa da Praia was captured by the terrorists at dawn," the Moz24Horas website reported Wednesday, while a military source told AFP that the small town and its port had "fallen".

Police did not respond to requests for comment. Mocimboa da Praia lies less than 80 kilometres (50 miles) south of Afungi peninsula where a liquefied natural gas (LNG) facility, one of Africa's biggest single investment projects, is located. The port is currently a major traffic hub for the gas project.

Northern Mozambique has been hit by a jihadist insurgency since 2017 that has killed more than 1,000 people and complicated the country's plans to develop its offshore gas reserves.

The military source said a rocket-propelled grenade sank a boat owned by former president Armando Guebuza during Wednesday's assault. "The situation is complicated," the source said.

Under Guebuza, Mozambique secretly borrowed about $2 billion from Credit Suisse and Russia's VTB Bank to finance maritime surveillance and to buy military and tuna fishing vessels from Privinvest in 2013 and 2014.

But the government only disclosed the debt in 2016 -- a development that plunged the poor, donor-dependent country into its worst-ever financial crisis. Attacks in the region have already killed at least 1,300 people according to the Armed Conflict Location & Event Data Project (ACLED). 

Displaced people number more than 250,000, according to aid organisations working locally. In its latest weekly report released on Wednesday, ACLED said "insurgents and government security forces have been in more or less constant running battles in the area" for the past week.

The attacks started in 2017 in Mocimboa da Praia and have since spread to massive swathes of Cabo Delgado province. The latest is the third attack on the town this year. Islamic State Central Africa Province (ISCAP), affiliated with the Islamic State group (IS), has the stated goal of establishing a caliphate in the region.

It has claimed some of the attacks since June 2019, often posting images of slain soldiers and seized weapons.