GO-AHEAD TO SALE OF ROVUMA BASIN

The Mozambican government believes that by the end of this year it could receive hundreds of millions of dollars in capital gains tax arising from the sale of shares in the Rovuma Basin Area Four gas fields in the far north of the country.This arises from the deal whereby the Italian energy company ENI sells half its holding in Area Four to the US oil and gas giant, ExxonMobil. This deal should net the Mozambican state 354.5 million US dollars. Speaking to reporters on Tuesday, at the end of the weekly session of the Council of Ministers (Cabinet), the Minister of Mineral Resources and Energy, Leticia Klemens, said the government has approved a decree altering the terms and conditions of the complementary accord to the Area Four Concession agreement, under which ENI is exploring for oil and gas. 

The decree gives the go-ahead to the sale of shares to ExxonMobil, and allows ENI to delegate to ExxonMobil the powers of operator for all operations to liquefy natural gas on shore. ENI is already pushing ahead with a floating liquefied natural gas (FLNG) platform above the Coral South gas field, about 40 kilometres from the coast of Cabo Delgado province. But Coral South is just one of several fields in Area Four, and gas from other fields will be liquefied onshore, at facilities in the Afungi Peninsula, in Palma district, under the responsibility of ExxonMobil. 

Klemens said approval of the sale of shares to ExxonMobil will bring advantages to Mozambique, since “ExxonMobil is a major company, with technical competence, including in gas liquefaction operations, and it is financially robust. It is one of the great world leaders in the natural gas market”.  “For Exxon Mobil to enter, we, as the government had to authorise its entry”, the Minister said. “The government has now given its authorization”.Under the payment terms, ENI must pay the capital gains tax within 30 days of concluding the negotiations between ENI and ExxonMobil. ExxonMobil is paying 2.8 billion dollars for half of ENI’s shares in Area Four. ENI controls a 50 per cent indirect interest in Area Four, owned through ENI-East Africa, which holds 70 per cent of the concession. The remaining 20 per cent held via ENI-East Africa belongs to the Chinese company CNPC. The other three partners, with ten per cent each, are Galp Energia of Portugal, Kogas, and Mozambique's National Hydrocarbon Company .