Mozambican government wants to tax profits on sale of Cove Energy

2 March 2012

The Mozambican government plans to apply a tax on profits to the sale of Cove Energy, a company that is being fought over by a number of international groups, said Mozambique’s Mining Resources Minister.

According to financial news agency Reuters, Minister Esperança Bias noted that the government had decided to apply the tax to the sale of the company as it planned to benefit from a transaction related to the country’s mining resources.

Cove Energy’s main asset is an 8.5 percent stake in Area 1 of the Rovuma Basin, in the sea in northern Mozambique, where US group Anadarko Petroleum, which has the biggest stake and is the operator, announced it had discovered natural gas reserves estimated to total 30 trillion cubic feet.

The Royal Dutch Shell group offered US$1.6 billion after Cove Energy put itself up for sale and Thai state group PTT immediately offered US$1.77 billion.

A few days later Indian group Oil and Natural Gas Corp, a subsidiary of gas distribution company GAIL India, announced it was considering putting forward a counterproposal to acquire Cove Energy for US$2 billion.

Cove Energy, which is listed on the Alternative Investment Market (AIM) of the London Stock Exchange announced it was for sale last January. Its main shareholders are Standard Life, M&G Investment Management, Fidelity Worldwide, F&C Asset Management and J.P. Morgan Asset Management UK. (macauhub)