Sales of oil block stake expected to net Mozambique a minimum of US$572 million

11 March 2013

Mozambique may bring in between US$572 million and US$1.44 billion from the announced sale of stakes in the Area 1 oil block by US company Anadarko Petroleum and Indian company Videocon Industries, according to the Mozambican press.

In the sale of 8.5 percent of the same block owned by Ireland’s Cove Energy to Thailand’s US$1.9 billion, the Mozambican Tributary Authority charged a rate of 12.8 percent on capital gains generated in the transaction.

The reason given by the Tributary Authority for not applying the 32 percent rate charged to corporations was that the company was still in its investment stage and had yet to earn anything from the project.

As Anadarko and PTT each plans to sell 10 percent of Area 1 and based on the Cove Energy Sale, the two transactions may be worth a total of US$4.5 billion and the amount charged by the Mozambican state may be between US$572 (at a rate of 12..8 percent) and US$1.44 billion (at a rate of 32 percent).

The Indian group said it had hired Standard Chartered and Union dês Banques Suisses (UBS) to head up the sales process and that the first proposals to buy the 10 percent stake would be received by 14 March.

The international press, specifically UK newspaper the Financial Times, has noted interest in the stakes from Royal Dutch Shell, which withdrew from the auction to buy Cove Energy due to the high price, as well as state groups from India and China.

The consortium that operates the Area 1 block is led by Anadarko, which has a 36.5 percent stake, and the other partners in the block are Japan’s Mitsui (20 percent), BPRL Ventures and Videocon (both from India and with 10 percent each), Thai state company PTTEP (8.5 percent) and Mozambique’s Empresa Nacional de Hidrocarbonetos (ENH) with the remaining 15 percent. (macauhub)