Mozambique in no hurry to launch sixth licensing round, says minister

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The government is in “no hurry” to launch the country’s sixth oil and gas exploration licensing round, the minister for mineral resources and energy (MIREME), Max Tonela, told public broadcaster TVM on Wednesday. 

“There is no activity in this regard,” he said. “We must first look at our regulations and see what can be improved in order to allow a better optimization or maximization of these resources for Mozambique.”

The government should launch the new auction before 2024 – which is when its latest five-year plan ends – once it has updated upstream legislation, particularly around how oil and gas profits are shared between the operators and the state, a ratio known as the ‘R-factor’, he said. 

“In the case of the Rovuma Basin, the Mozambican state receives about 51% of the benefits and the partners/concessionaires about 49%. And we think that there may be room to improve this distribution,” Tonela said, adding that the new licensing round would launch “only after proceeding with the conclusion of this analysis, and seeing the right path.”

Oil companies were initially invited to express interest in the sixth exploration round in December 2019, a spokesperson for petroleum regulator, INP, told state-owned newspaper Notícias on Wednesday. 

The regulator had been planning to launch the round this year and, to that end, had hearings with potential bidders, including Total, Shell, ExxonMobil, BP, Eni, and Sasol, between 5 February and 15 March. Some companies, like China’s CNOOC, could not take part because of covid-19 related restrictions, but remained interested, the spokesman said.

INP is currently defining how the new licensing blocks should be delineated and which blocks should be put up for auction, based on these discussions and the regulator’s own data.  The areas will be submitted to MIREME for approval, after which INP will start laying out the terms of reference for the auction.

Mozambique’s fifth licencing round closed in June 2015. As INP had intended to run a new auction every two to three years, the aim had been to launch the sixth licensing round in 2017. However, disagreements over the terms of Mozambique’s exploration and production concession contract (EPCC) – the legal framework used to govern upstream oil and gas rights in Mozambique – meant it took more than three years to sign agreements with the winners of the fifth licensing round. The drawn out negotiations saw two companies, Norway’s Equinor and UK’s Delonex Energy, abandon their exploration blocks in Mozambique.

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