CLOSE TO ACQUIRING SHARES IN ROVUMA BASIN

The American oil company ExxonMobil is close to closing the deal to buy shares in offshore Area Four of the Rovuma Basin, off the coast of the northern Mozambican province of Cabo Delgado, where large quantities of natural gas have been discovered.According to Oscar Mitha, chairperson of Mozambique’s National Hydrocarbon Company (ENH), ExxonMobil will not enter Area Four as a minority shareholder. Speaking to reporters on Thursday during a National Business Forum held by the Confederation of Mozambican Business Associations (CTA), Mitha said the American company “will at least be on a footing of equality with another partner”.That partner can only be the Italian energy company ENI, which is currently the operator of Area Four. ENI-East Africa holds 70 per cent of the shares in Area Four. This company is 50 per cent owned by ENI itself and 20 per cent by the China National Petroleum Corporation (CNPC). Galp Energia of Portugal, Kogas of South Korea, and ENH itself each hold ten per cent of Area Four.With the negotiations currently underway between ExxonMobil and ENI, Mitha believed that the American company would become the Area Four operator. The share purchase will result in a very substantial payment of capital gains tax to the Mozambican exchequer.Mitha thought this was encouraging news, given the huge financial capacity of ExxonMobil, and its dominant position in the hydrocarbon position. 

A major investment by ExxonMobil could attract other companies to Mozambique.Cited in Friday’s issue of the independent daily “O Pais”, Mitha dismissed claims that ExxonMobil would only buy shares in order to sell them later at speculative prices. “All development of these areas is done through binding development plans”, he said.Mitha was confident that ENI will announce its Final Investment Decision for Area Four in November, or at the latest in December.
As for the Texas-based company Anadarko, which is the operator of the adjacent Rovuma Basin Area One, Mitha said its Final Investment Decision should be announced in the third quarter of 2017.“We have to prepare ourselves, because the third quarter of 2017 is tomorrow”, he added. “It may seem a long way off, but it isn’t. The sooner we stop talking and go into action, the better it will be for us”. ENI and its partners intend to produce liquefied natural gas (LNG) from a floating LNG plant installed above the Coral South gas field. Anadarko’s plans include building an onshore LNG factory in the Afungi Peninsula, in Mozambique’s northernmost district of Palma.Earlier this month, ENI and its partners signed an agreement in London to sell LNG to BP Poseidon, a company fully controlled by British Petroleum (BP). The contract with BP covers the sale, for a period of more than 20 years, of all the LNG that will be produced at the Coral South facility. This floating factory will have the capacity to produce over 3.3 million tonnes of LNG a year.