Mozambique Offers More Gas and Oil Blocks

Mozambique on Thursday opened up 15 new offshore and onshore areas for gas and oil exploration and production in its north, centre and south, a week after national elections which are expected to return the ruling Frelimo party to power.

The blocks on offer in the latest licensing round launched in Maputo and London included three new areas of the northern Rovuma Basin, where U.S. oil major Anadarko Petroleum Corp and Italy's Eni are already developing multi-billion-dollar liquefied natural gas (LNGLF) (LNG) export projects.

Around 180 trillion cubic feet of gas have been found in the Rovuma Basin, enough to supply Germany, Britain, France and Italy for 18 years.

Mozambican officials expect more than $30 billion will be invested initially in the natural gas sector to build capacity to produce 20 million tonnes per year of liquefied natural gas (LNG), with first exports due to start in 2018.

Other areas offered on Thursday in the fifth gas and oil licensing round held by Mozambique included six offshore blocks in the central Zambezi Delta, and two more off Angoche in the northern province of Nampula.

Mineral Resources Minister Esperanca Bias led the presentation in London and Jose Branquinho, director of resource evaluation at the National Institute of Petroleum (INP), delivered the one in Maputo.

The onshore areas on offer were three in the central-south Pande-Temane zone and one at Palmeira in the south.

Amended Petroleum Law
Mozambique, which still bears the scars of a 1975-1992 civil war, held presidential and legislative elections last week. Provisional results so far show the ruling Frelimo party and its candidate Filipe Nyusi headed for a comfortable victory.

Although the voting in the former Portuguese Indian Ocean colony was endorsed as peaceful by African and international observers, the main opposition party Renamo has alleged fraud.

Renamo's candidate, former rebel chief Afonso Dhlakama, says he will challenge the results but has ruled out violence, which is reassuring for foreign donors and investors.

The timetable provided by Mozambique's INP for the latest gas and oil licensing round says bids will be accepted until Jan. 20, 2015 and will then be evaluated during February and March to allow contract negotiations to take place in March and April. Contracts will be signed from April onwards.

The opening up of new areas followed the passage of an amended petroleum law by parliament in August that requires investors to partner with state oil firm ENH. The law also says 25 percent of all gas produced should go to the domestic market.

Mozambique is hoping revenue from its large natural gas deposits and its fledgling coal mining and export industry will help it emerge from years of poverty and aid dependence.

Industry analysts say it needs to develop its LNG by the end of this decade as other supplies come on the market from West and East Africa and the global supply/demand scenario shifts, with the United States moving from energy importer to exporter.

Some experts say Mozambique may struggle to meet its official target date of 2018 for the start of LNG exports.

(By Manuel Mucari; Writing by Pascal Fletcher; Editing by David Evans)