Agreement with Area 4 Block operators in Mozambique will be reached soon

1 April 2019

The agreement between the Mozambican government and the Rovuma Area 4 Area operators is expected to be reached “soon,” thereby allowing the natural gas project to go ahead, said the Minister of Mineral Resources and Energy.

Max Tonela, quoted by Mozambican daily newspaper O País, also said that the development plan presented will be approved in the coming weeks, “after almost five months of discussions around the document.”

Approval of the development plan is crucial for making the final investment decision (FID), which had been estimated for the first quarter of 2019.

The newspaper wrote that the FID did not happen on schedule due to the failure of the first version of the block’s development plan, presented by the oil companies in July 2018, as it contained many gaps and violated a number of requirements.

One of the points of contention between the Mozambican government and the consortium led by the ExxonMobil and ENI groups is related to the limit on natural gas extraction in that block.

In the development plan presented to the government, the oil companies demand to extract between 21 billion and 22 billion cubic feet of gas to feed the project, which is above the authorised limit of 12 billion cubic feet.

Tonela confirmed the deadlock, but without specifying the consensus reached between the parties, he said that the important thing is to determine which portion of the gas to be extracted will feed the domestic market.

The project is operated by Mozambique Rovuma Venture, a partnership whose shareholders are ExxonMobil, ENI and the China National Oil and Gas Exploration and Development Corporation, which jointly hold a 70% interest in the Area 4 block concession, with three stakes of 10% owned by South Korea’s Kogas, Portugal’s Galp Energia and Empresa Nacional de Hidrocarbonetos (ENH) of Mozambique. (Macauhub)