Mozambique:Government Approves Gas Exploration Contracts

August 10, 2018 1:42 pm Published by Leave your thoughts

Maputo — The Mozambican government has approved contracts awarding exclusive
rights to three companies to explore for hydrocarbons in designated
areas over the next eight years.

The companies successfully bid for the concessions in 2015 during the
fifth licencing round held by the National Petroleum Institute (INP).

However, there has been a long delay in agreeing on the concession
contracts due to concerns raised by the oil companies over
inconsistencies in national legislation, regulations relating to the
exchange rate regime, and requirements to be listed on the Mozambican
Stock Exchange.

The official government spokesperson, Ana Comoana, the Deputy
Minister of Culture and Tourism, told reporters on Tuesday, after the
weekly meeting of the Council of Ministers, that the concession
contracts have a duration of eight years but can be extended to
thirty years if commercial quantities of oil or gas are discovered.

Comoana added that the concessionaires are expected to invest 825
million dollars in their search for hydrocarbons. They are also
required to launch public tenders for any contract for goods and
services worth over 80 million meticais (about 1.38 million US
dollars at current exchange rates).

The spokesperson explained that the contracts oblige the involvement
of Mozambican companies in the provision of services. She added that
the projects are expected to create jobs, increase technical
training, and involve local companies including small and
medium-sized enterprises.

Four companies placed successful bids in the fifth licencing round.

However, London-based Delonex Energy subsequently took the decision
not to proceed with its participation. As a result, the three
companies who will be operators are the US giant ExxonMobil, South
Africa’s Sasol, and Italy’s ENI.

ExxonMobil was awarded Offshore Block A5-B near Angoche in the
northern province of Nampula, and Offshore Blocks A5-C and A5-D in
the Zambezi Delta in the centre of the country.

ExxonMobil will lead a consortium which includes the Russian company
Rosneft and Mozambique’s National Hydrocarbon Company (ENH). Both the
junior partners will hold a 20 per cent stake in the projects.

Sasol was awarded the Onshore Block PT5-C in the Pande-Temane area of
Inhambane. The company already has gas and light oil operations in
Inhambane. For the new venture, Sasol will team up with ENH, which
holds a 30 per cent stake in the consortium.

ENI was awarded Block A5-A off the coast of Angoche. Its partners
will be Sasol and ENH. In the original bid, the Norwegian state-owned
company Statoil (now renamed Equinor) was to take a 25.5 per cent
stake in the consortium. However, in January it announced it was to “disengage from negotiations on Block A5-A”.

ENI is already a major player in Mozambique’s hydrocarbon sector. It
is the operator in Offshore Area Four in the Rovuma Basin, off the
coast of Cabo Delgado province, which contains an estimated 85
trillion cubic feet of natural gas. It is working with its partners
to develop Liquefied Natural Gas (LNG) facilities. In 2022, it should
begin producing 3.4 million tonnes of LNG from its floating liquefied
natural gas project. ENI is expected to take its final investment
decision next year on developing a much larger onshore facility
capable of producing 15.2 million tonnes of LNG per year. If all goes
to plan, this could begin production in 2024.

ENI’s subsidiary ENI-East Africa holds a 25 per cent stake in the
Mozambique Rovuma Venture, as does ExxonMobil. The other partners in
the consortium are China National Petroleum Corporation, which holds
a 20 per cent share, while Kogas of South Korea, Galp Energia of
Portugal, and ENH each have a ten per cent stake. (AIM)

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