Experts in the Field

What does the new round of bidding for blocks in 2013 mean for Mozambique’s policies regarding exploration?

Today, we have companies working with us in exploration and exploitation activities for hydrocarbons and other minerals. In terms of hydrocarbons, we have started large-scale natural gas production in the Pande fields. We are producing and exporting gas, as well as using some for domestic production. Our intention is to increase the quantities that we are using internally in Mozambique for power generation and for other utilizations. Basically, apart from the consortium led by Sasol in Pande and Temane, we have other areas in Sofala. We have three contracts for exploration in the blocks of Sofala, M10, and Buzi. The activities are running according to schedule. In the Rovuma Basin we have four blocks offshore under exploration. Three of them are under drilling operations, and while two of them are in more advanced stages than the others, all are on schedule. The intention is to start with natural gas production in 2018 in Rovuma, and I am sure that we will meet this target. We are carrying out technical studies to see if we can launch new blocks for tender, and in 2013 we will open some areas up to the private sector. We needed to investigate our geology in order to hold more effective discussions with the private sector. I believe that we will succeed in this. We need to complete some milestones quicker, meaning we cannot allow for delays. We need to learn from the results of other tenders and see which areas we will open.

What role do your foresee for the National Hydrocarbons Company (ENH) in these new blocks, and with regard to further exploration?

In all blocks that we are offering, ENH is participating. We understand that when we talk about resources we need to make sure that the Mozambican people will be the first to benefit. This is why we have ENH for hydrocarbons and the Mozambique Mining Exploration Company (EMEM) for other minerals. There is no difference between the treatment we give to ENH or the Italian group Eni, for example. They all have to comply with the rules and legislation. ENH is part of all the projects, and in the future we can sell some shares to the public in these Mozambican entities.

Do you foresee ENH having a larger share, such as 40%, or operating blocks?

Today, ENH has between a 5% and 30% share, though maybe in the future it will have more. If ENH has the capacity to do so, then its share will increase; it depends on capacity. If ENH has the capacity to operate at a high level, I do not see problems.

CMH is a special purpose vehicle created specifically for operations in the Pande and Temane gas fields with Sasol. With new onshore gas fields being explored, will its mandate be extended?

CMH was created specially as a vehicle for the Pande and Temane project. We will see if CMH will be in the other blocks, or if it will focus only on Pande and Temane. We need to look at the advantages of having CMH in other blocks. We are studying how to deal with this issue because we have ENH, and in the future we will want to sell some shares to the public. We need to see how CMH will fit, or if it will fit into our plans.

What role do public-private partnerships (PPP) have in developing the necessary infrastructure to facilitate, export, and benefit from the natural resources in Mozambique?

I think that if we want to succeed, a PPP is needed. Mozambique cannot do business without the private sector. For LNG-related projects, PPPs will be important and will be considered. We need to bring together the private sector and the public sector to complement our projects. For the LNG plant, for example, we prefer to have all the companies working together when possible.

Another area of exploration is Lake Niassa. How would you characterize your negotiations with Malawi in exploring this area?

We do not want to explore the entire country at the same time. We are only concerned with a few areas for the next tender. I am not sure if we will consider Lake Niassa or Rovuma. We are analyzing the data and then we will make a decision.

To what extent is vast exploration for minerals detrimental to Mozambique’s agricultural sector?

The agriculture and mining sectors can coexist. If you go to Moatize, you will find that there are some areas that specialize in agriculture. The question is, where is the best place to specialize in agriculture? If you go to Angónia, a district in the northern part of Tete, for example, the agriculture sector is excellent; however, unfortunately I do not know if there is coal, but if there is coal in Angónia, it will be great for the next generation. It is a question of balance, to see how best to use the resources that we have.

What would you say are the key points that investors should be aware of with regard to the new petroleum law?

I think that our legislation is excellent. We are trying to review some issues in order to fill in some gaps, but the revisions will still be attractive to investors. I have many companies queued up to come to Mozambique. The investors must be sure that what we want in Mozambique is to give them rights to explore; however, we want to have benefits from the exploration activities. It does not make sense if a company spends $10 million on a license and for business reasons it goes to a stock exchange in London or Sydney and sells it for $1 billion. The Mozambican people do not benefit from that. The legislation ensures that the assets are here in Mozambique; it is a question of a balance of benefits, both to the Mozambican people and the investors. I know that in other countries when you want to relinquish the license you do not have the right to transfer your rights to another person. Here in Mozambique, we allow this opportunity. If you do not want to continue, then it is business, you can transfer your rights, but we want to have some benefit from the transfer.

Is there a need to renegotiate contracts?

Contracts are contracts. It is a business venture that two parties need to discuss and reach an agreement. When you do business you are prepared to talk anytime about what you have signed, and what you want to have. Our contracts are new; the only contracts that were signed 10 years ago are those with Sasol and Kenmare. All the other contracts are just three or four years old. We need to balance what we want to gain through renegotiations.