Mozambique Oil & Gas: CIP questions delay in signing of hydrocarbon contracts from 5th licensing round

Mozambique 5th License Round
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The non-governmental organisation Public Integrity Centre (CIP) today questioned the delay in the signing of final contracts between the Mozambican government and the multinationals that won the fifth hydrocarbons licensing round.

“The argument that negotiations between the parties are behind the delay in signing the contracts for the fifth licensing round is a cause of concern,” the CIP said in a statement distributed to the media.

At issue is total of 15 areas, including 11 offshore (in the Rovuma, Angoche and Mozambique Basins) and four onshore (in Pande-Temane and Palmeiras), covering a total area of 74,356 square kilometres.

The international tender, which attracted 23 bidders, was launched in October 2014 and consortia led by ENI, ExxonMobil, Sasol and Deltonex Energy were the winners.

According to the CIP, bidding contracts for exploration of these areas should have been ready by April 2015, taking into account that, in normal cases, the evaluation and negotiation for exploitation of hydrocarbons takes a maximum of nine months.

The organisation further notes that the argument that delays in entering into contracts are the result of negotiations is not valid, since “the proceeding takes place in the context of an improved and robust fiscal and legal framework, there is no point in negotiating”.

The CIP also notes that the readjustments of the legislation made after the announcement of the results, which were released three months after the launch of the licensing round, suggest that the government has been pressured by multinationals to change the laws.

“At the moment, the Government says that the contracts will be signed by the end of this year, but had already said before that they would be signed in 2016, then in 2017,” the CIP adds.

The organisation points out that the delay in signing the final contracts may be related to the participation of small and medium-sized Mozambican companies in the process, noting that the main multinationals, such as Italy’s ENI and the US company Exxon, have expressed their opposition to the clause requiring the involvement of Mozambican companies in the projects.

“The same companies which refused to include nationals in their proposals, were selected and now impose their endless conditions and negotiations continue,” the CIP maintains, concluding that “the Government may be involved in a [project that] will not have the expected results and will cost the state”.

Mozambique expects that the multinationals winning the fifth international oil exploration and exploration competition will invest US$700 million over the next few years, according to data from the National Petroleum Institute (INP). Source: Lusa

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