Mozambique: Oil companies want licensing round extended

Mozambique oil & gas acreage06 December 2014, Maputo — International oil companies are requesting the Mozambican government to extend the tender launched in October for 15 hydrocarbon blocks, according to Arsenio Mabote, the chairperson of the National Petroleum Institute (INP).

The licensing round was launched in Maputo and London on 23 October. The fifteen blocks on offer cover an area of 76,800 square kilometres. They are located off the northern coast including the Rovuma Basin, the Zambezi Delta and the area near Angoche, in Nampula province, and onshore around Pande/Temane and Palmeira, in the southern provinces of Inhambane and Maputo.

The bidding will close on 20 January and INP will analyse the offers after a period of clarification. But some of the companies interested in bidding now say they need more time.

Cited in Friday’s issue of the independent weekly “Savana”, Mabote, who was speaking to reporters during an international Gas Summit in Maputo, admitted “in general, companies are used to having six months to prepare their bids. But this time there was a decision by the government that the bids should be submitted by 20 January”.

“We are, in fact, receiving many signs from various investors who want to draw up better technical bids in order to win a position in the various blocks offered”, he added.

Asked why the government had allotted only three months to the tender, Mabote said “this was a decision so that the government might have, as urgently as possible, an idea of who the future investors in these exploration areas will be”.

As for reports that the first production of liquefied natural gas (LNG) from the Rovuma Basin might be delayed for a couple of years, until 2021, Mabote insisted that the government still wants to see the gas flowing by 2018/2019, “although we recognise that negotiating large scale contracts and the fall in the world oil price could have an impact on the entire logistics chain for the LNG project”.

As for falling gas and oil prices, Mabote shrugged this off as a cyclical phenomenon, and he was confident that prices will bounce back.

“We all know that oil prices are cyclical”, he said. “Today prices have dropped by about 30 per cent, but within three or four years they could rise again, maybe by 30 or 40 per cent. This is not a time to sit back and fold our arms, it is time to continue working and put our projects into practice”.

Meanwhile, it seems certain that the Italian energy company ENI, which is the operator of Rovuma Basin Area Four, will proceed with plans for a floating LNG factory.

This technology is untried, and initially the Mozambican government wanted all processing of the gas done onshore, and not at sea.

But it has now yielded to ENI’s request. Contacts for building the floating factory are now being signed. In October, it was announced that ENI has awarded the FEED (Front End Engineering Design) contract to a consortium formed by the Texas-based company KBR and Daewoo of Korea. This will draw up the project for a floating LNG plant moored 50 kilometres from the Mozambican coast.

The director of ENI-Mozambique, Fabrizio Trilli, says the company hopes to export its first LNG in 2019.

ENI has, however, promised the authorities that it will build a power station onshore, in Palma district, and also a GTL (gas-to-liquid) plant, which will transform natural gas into liquid fuels such as diesel. In the GTL project, ENI is in partnership with Mozambique’s National Hydrocarbon Company (ENH) and the South African petro-chemical giant Sasol.

The Mozambican fuel company Petromoc took the opportunity of the gas summit to announce plans to expand its logistics infrastructures to meet the challenges of the future hydrocarbon industries.

Petromoc chairperson Nuno Oliveira told the meeting that the country is working to capitalize all the existing infrastructure so as to ensure that the exploration and production of energy resources is undertaken in a sustainable and continual fashion.

In 2013 alone, he said, Petromoc had invested over 100 million US dollars in various areas, including storage facilities for gas and liquid fuels, development of its chain of filling stations, and a planned asphalt factory.

What is most important, Oliveira argued, is to set up partnerships which can take advantage of the knowledge of other countries and companies so as to avoid the mistakes they may have made in the past, and to ensure that hydrocarbon resources benefit Mozambican communities.

“Everything must be done simultaneously to ensure that, over time, foreign technical staff can be replaced by Mozambicans”, he said.

One of Petromoc’s projects is to expand the storage capacity in the central port of Beira for domestic cooking gas from the current 800 tonnes to 5,800 tonnes, to meet the rising demand for this fuel in Sofala, Manica and Tete provinces.

Five new tanks, each with a capacity to store 1,000 tonnes of gas, will be built, as well as a command room, a system to fill bottles and tanker trucks with the gas, and a gas pipeline. The entire project will cost around 38 million dollars.

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