Mozambique 13 March 2017: Waiting for a windfall

Good morning. The wait is over for the world’s largest oil company, ExxonMobil, to take the plunge into Mozambique’s Rovuma Basin, after it announced a deal to buy 25% in Area 4 from Eni - putting it equal with the Italian company as the biggest shareholder, and joint operator, of the block.

SEE: Exxon buys 25% stake in Eni’s Mozambique gas block for $2.8 billion

The price Exxon is paying - $2.8 billion - was more than many industry analysts expected, but still puts the block at little over half of its value when CNPC took a 20% stake in 2013, thanks to a sharp drop in global oil prices.

The question on many lips in Maputo is how much capital gains tax will be due to the state. Zitamar understands it is likely to be far below what had been hoped for - and will not come in time to stop the country defaulting on the next ProIndicus and MAM repayments.

SEE: Mozambique’s uncertain windfall from Exxon-Eni deal still months away

But Exxon’s entry has a significance far beyond any short-term capital gains windfall  - and seems to have ushered in a new optimism in Mozambique’s gas sector. The next milestone will be FID on the floating LNG project, which continues to be led by Eni. ENH head Omar Mithá said on Friday that FID would happen by the end of this month, though other sources over the weekend have said that Eni is in fact targeting the end of April.

SEE: FID on Mozambique floating LNG expected by end of March, says ENH head

Beira’s new coal terminal has caused controversy in the Mozambican press over recent days, with suggestions that the original concession was torn up to allow Transport Minister Carlos Mesquita to get his company involved in the project. Whatever the truth of that allegation, the official justification - that India’s Essar needs to transport Zimbabwean iron ore through the terminal - makes little sense in light of the fact that Essar no longer has those mines.

SEE: Indian concessionaire for Beira coal terminal no longer has Zimbabwe iron assets

In other news from Zimbabwe, the Mozambique portion of a project to connect its power grid to those of Zimbabwe and South Africa is lagging behind the other two, with Mozambique yet to decide on the route this side of the borders.

SEE: Mozambique to decide route for regional interconnector project

Have a great week.
 

RECENT POSTS

• FID on Mozambique floating LNG expected by end of March, says ENH head

• Mozambique to decide route for regional interconnector project

• Mozambique’s uncertain windfall from Exxon-Eni deal still months away

• Exxon buys 25% stake in Eni’s Mozambique gas block for $2.8 billion

• Indian concessionaire for Beira coal terminal no longer has Zimbabwe iron assets