MOZAMBIQUE - Energy & Mining
Chairman, National Institute of Petroleum (INP)
Graduated from the Petrochemical Institute of Baku — Azerbaijan, Carlos Zacarias holds a master degree on Petroleum Geology and for about 10 years has worked at the National Directorate for Coal and Hydrocarbons (DNCH). He has served various positions in the National Petroleum Institute (INP) of Mozambique since its creation, in 2005. He has supervised and monitored all exploration activities that led to Rovuma discoveries, including Prosperidade and Mamba, and the negotiation of the Legal framework for Rovuma projects designed for Area 1. He was appointed in August 2015 Chairman of INP and is heading negotiations with concessionaries of the Rovuma Basin of Mozambique.
The INP is a public institution with patrimonial, financial, and administrative autonomy. It was created in 2004 as a regulatory body for the petroleum upstream sector. Its mandate comprises the whole upstream value chain, including promotion, licensing, contract negotiation, contract monitoring, research, production, and development of the petroleum sector through processing, liquefaction of gas, and transportation.
At first, the INP was a fairly small institution, primarily concerned with the management of the Pande and Temane gas fields in Inhambane province, where extraction activities started in 2004 by the South African company Sasol. Although this was the only ongoing approved project with limited reserves (gas resources) at the time, the Ministry of Energy and Mineral Resources (MIREME) always believed that the country had a higher potential for hydrocarbon exploration elsewhere in the country. We put a lot of effort to attract foreign investments and were finally able to launch a tender in 2005 for the licensing of the areas of the Rovuma Offshore Basin, attracting international oil companies such as Anadarko, Eni, Artumas, and Norsk Hydro (now Statoil/Equinor). In 2010, Total (former Anadarko) made the first discovery of the Windjammer field, soon followed by the huge findings at Area 1 and Area 4 also by Eni of the Mamba field and Coral field. The 2020 marks the 10th anniversary of the first findings, which marks an historical and scientific milestone in the development of Mozambique petroleum sector. The discovery was considered as one of the most important gas discoveries in recent years. In 2014, a Decree Law was approved to allow and facilitate the development of Rovuma LNG projects. Back then, we thought that the project would be up and running by 2018. Unfortunately, the market conditions combined with price of petroleum which went down in 2014, and projects lost opportunities for that window. In-between, we realized that the only way to secure development in all areas would be to advance three projects: the Floating LNG (FLNG) plant in Coral Sul operated by Eni, the Golfinho-Atum project led by Total (previously Anadarko), and the Rovuma LNG project in Area 4 led by MRV (ENI, ExxonMobil and CNPC). While the initial investment was expected to be around USD10-15 billion, the combined investments of the three plants now add up to USD50 billion—an investment that will transform the country’s economy within a few years.
The FLNG plant for the Coral Sul field is currently being constructed in South Korea. If everything goes according to plan, the platform will be transported to the country by the end of 2021 and production will start by the end of 2022. Work on the Golfinho-Atum project has just begun, but the contracted companies are already in the field. We expect to start production by the end of 2024. Work on the Rovuma LNG project will be the following as soon as the final investment decision is announced, which is expected by mid of 2020, and the first production in 2025. The expected output is 3.3 million tons from Coral Sul, 12 million tons from Golfinho-Atum, and 15 million tons from Rovuma LNG. All this will turn Mozambique from a small producer to a global exporter of liquefied gas.
Projects are designed for a shelf life of 25 years. 2020 will be the 16th year for Pande and Temane; the project has reached its peak and if there is no addition of new gas reserves, it is expected to gradually slow down production. However, the existence of gas and hydrocarbon is not an isolated phenomenon—it is a regional characteristic. So, there were investments made that led to finding other reserves in the area that could eventually lead to the extension of gas production in the area. However, these findings are not as large as Pande and Temane, and will be a fraction of Rovuma’s output. Current production in Pande and Temane is about 150 million gigajoules (GJ), with 30% destined for local consumption and the rest exported to South Africa.
Since the Rovuma’s discoveries, we have been assessing the country’s potential in other areas. We signed contracts for areas in Angoche (5A and 5B) and Zambesi (5C and 5D), with ExxonMobil operating Angoche 5B and Zambezi 5C and 5D (with partners Rosneft, Qatar Petroleum and ENH) and ENI operating Angoche 5A (with Sasol, Qatar Petroleum and ENH). This is an assessment currently in progress so we expect the exploration wells to be done next year. According to our belief, we may at least eventually find more gas.
We make every effort to be transparent, starting with publishing all the contracts we have on our webpage. We disclose and advertise all the information in terms of existing reserves, production, gains, cost controls, and so on. With relation to the local content, this is one of the most important aspects that the government has been prioritizing. The Gas Master Plan states we should use these resources to leverage the country’s industrial development. There is a provision in the petroleum laws that defines a specific amount of petroleum or gas resources that needs to be used for the national market; this will correspond to about 900 million cbft per day for the Rovuma projects. Moreover, the real value of the gas industry will come from generating employment, creating partnerships between local and foreign companies, and fostering the growth of the local economy. All companies operating in Mozambique must include a chapter in their development plan explaining how they are going to employ, train, and enable people from Mozambique’s population.
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