Progress at last in Mozambique bid round

14 August 2018, Week 32, Issue 750

Operators in Mozambique have finally been given the green light to go ahead with oil and gas exploration activities after several years of delays. 

The council of ministers approved exploration and production contracts for five offshore and one onshore area, it was reported on August 7 by Mozambique’s Noticias newspaper. The round was held in 2015 but the government and the winning companies had struggled to reach a final agreement. The last step, the signing of the concessions, is expected to come in September. 

“The contracts give the concessionaries exclusive rights to conduct oil operations with the aim to produce oil from the natural resources deposits underneath the areas,” said Ana Comoana, spokeswoman for the cabinet. 

The blocks include A5-A, A5-B, Z5-D, Z5-C, PT-5 and Mazenga. The first three are offshore Angoche, the fourth is in the Zamebzi Delta, while the last two are in Inhambane. 

Eni was awarded A5-A, ExxonMobil A5-B, A5-D and Z5-C while PT5-C went to Sasol. According to Mozambique sources, Empresa Nacional de Hidrocarbonetos (ENH) is working on the Mazenga block alone. It previously held the area with Sasol. 

The list originally included Equinor and Delonex Energy, but both withdrew from their concessions earlier this year.

Negotiations were repeatedly derailed by concerns surrounding Mozambique’s petroleum law and regulatory framework for offshore exploration. The government eventually revised the exchange rate regime and fiscal laws that govern hydrocarbon activities. 

Mozambique’s willingness to reach an accommodation with its foreign partners probably stems from an eagerness to supplement government revenue after the International Monetary Fund (IMF) withdrew funding in 2016 in response to revelations about questionable loans. 

Over the first eight years of concessions, the government has said it expects investments into these blocks to reach US$825 million. Comoana was reported as calling for oil companies to give preference to local companies when seeking logistical and service support. 

Some reports have suggested Mozambique may hold another bid round in 2019. 

 

Edited by

Ed Reed

Editor

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