Bids are due in next month for Mozambique’s latest licensing round, with applications to then be evaluated over the course of the following two months.
According to the National Petroleum Institute (INP), Mozambique’s regulatory authority for oil and gas, bidders have until 20 January to submit their applications. Bid clarification presentations are likely in February 2015, with bid evaluation scheduled for February and March. A total of 15 blocks are being offered, covering a combined area of 74,724 sq km (28,851 sq miles).
Shortlisted companies will then be invited for E&P concession agreement (EPCC) discussions, followed by eventual EPCC awards.
The 5th Licensing Round was launched after virtually a two-year delay, following the passage of a new petroleum law and fiscal terms governing oil and gas activities in the country, brought about by the huge gas discoveries found in the deepwater sectors of its offshore acreage by operators such as Anadarko Petroleum and Eni.
A total of 11 deepwater blocks in the northern Rovuma Basin, Angoche Basin and Zambezi Basin are up for grabs, with the other four being onshore in the Pande Temane and Palmeira basins. The INP added that three blocks – R5-A, R5-B and R5-C – are on offer in the prolific Rovuma offshore basin, close to Areas 1 and 4 where Anadarko and ENI have made their large gas discoveries, now under development linked to a huge onshore LNG plant.
In the Angoche area, two unexplored frontier blocks – A5-A and A5-B – are on offer, while there are six blocks in the central Zambezi area: Z-5-A, Z5-B, Z5-C, Z5-D, Z5-E and Z5-F.
The amended petroleum law, passed in August, requires investors to partner with ENH, Mozambique’s national oil company, according to Esperanca Bias, the country’s minister of mineral resources. “We were waiting for the petroleum law to be approved. Now we have the tool we were seeking for new bids because those must be regulated by the new bill,” said Bias, according to Bloomberg.
Understandably, local content is a major part of the new law. The new petroleum tax law becomes effective on 1 January, 2015 and applies to all Mozambican and foreign entities performing petroleum operations under a concession contract. Taxpayers complying with obligations set in concession agreements signed under the previous law regime can continue complying with the previous law, unless they apply under the new regime.
The new tax law sets a corporate income tax at 32% to be paid in local currency and a petroleum production tax (or royalty) taken in kind or cash with a gross rate for crude oil of 10% and 6% for natural gas. But the rate will be reduced if production is for national industry use. A withholding tax at 10% on gross contract value and a cost recovery ceiling at 60% of the disposable petroleum are part of the law. The law also stipulates a 25% domestic supply obligation.
More details on the round are available at: www.inp.gov.mz.