Ending 3-Year Delay, Mozambique Awards Blocks
Mozambique on August 7 finally awarded concession contracts for five gas and oil blocks, paving way for a fresh round of exploration in the southeast African country.
The final signature on the contracts was delayed for almost three years.
The country's upstream regulator INP allocated the blocks – five offshore and one onshore - in the fifth licensing round in October 2015. Italy's ENI, US supermajor ExxonMobil, South Africa's Sasol, and London-based Delonex Energy won the bidding but had not started work due to protracted discussions with the Mozambican government over a range of issues, including inconsistencies in the petroleum law, tax terms, the exchange rate regime and a proposal - later abandoned - that sought to force the companies to list on the Mozambican Stock Exchange. Delonex has pulled out in May as the talks dragged on.
However following the August 7 decision, ENI, ExxonMobil and Sasol and their partners will invest around $825mn in exploration for gas in the next four years, government spokesperson Ana Comoana told reporters on Tuesday after the weekly meeting of the council of ministers. She said the concession contracts have a duration of eight years but they can be extended to 30 years if the companies discover commercial quantities of gas or oil.
"The contracts give the concessionaires exclusive rights to conduct oil operations with the aim to produce oil from the natural resources deposits underneath the areas," she said.
ExxonMobil, already invested in the country, was awarded offshore Block A5-B near Angoche in Nampula province to the north, and other offshore Blocks A5-C and A5-D in the Zambezi Delta in central Mozambique. The US giant will lead a consortium which includes Russia's Rosneft and Mozambique's state national hydrocarbons company (ENH) each of which will hold a 20% stake in the blocks.
Eni was awarded Block A5-A off the coast of Angoche. It will lead a consortium that will include ENH as well as Sasol; Equinor was to have taken a 25.5 % stake in the consortium in the original bid but the Norwegian state-owned company withdrew its interest.
Sasol was awarded the onshore Block PT5-C in the Pande-Temane area of Inhambane where it already has gas operations, alongside ENH with a 30% stake.
Mozambique has about 180 trillion ft3 of offshore natural gas, mostly in the Rovuma Basin off the northern province of Cabo Delgado. Exxon is working alongside Eni and other partners on plans to build a 15.2 mn mt/yr onshore liquefaction facility, fed by gas from their offshore Area Four, while US company Anadarko and its partners are planning a 12.88mn mt/yr onshore liquefaction complex, using gas from offshore Area One. Both are on course to taking final investment decisions next year.
In addition, Eni is already developing (with Exxon and partners) a 3.4mn mt/yr floating LNG project aimed to come onstream in 2022. Sasol meanwhile produces gas in southern Mozambique, some of which is used in power generation locally, with the rest exported by pipe to South Africa.