Tag Archives: Mozambique

Mozambique’s extractive sector revenue triple boosted by capital gains tax

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Revenue from the extractive sector in Mozambique hit almost $400 million in 2012 thanks to the introduction of capital gains tax in the country according to a new report by the Extractive Industry Transparency Initiative, EITI.

The rise in revenue is largely attributable to the US $170m capital gains tax (CGT) payment made by the petroleum company Cove Energy from the sale of its assets to Thailand’s PTT, although payments from other companies also increased.

The payment made by Cove according to the EITI underpins the petroleum industry’s growing importance for generating growth in the country despite falling gas prices although Mozambique also has significant mining activities, payments from oil and gas companies represented 80% of the government’s extractive revenue in 2012.

Cove Energy reveue

Capital gains tax payments deriving from the sales of assets are expected to generate government revenue in the short term before the  country starts its first LNG exports.

The 2012 report describes for the first time the allocation of gas royalties from company to the state with Sasol Petroleum Temane, the only gas project currently producing, transferred gas worth roughly US $2.5 million to the government. The National Petroleum Institute, on behalf of the government, allocated roughly 10% of the gas to the state-owned petroleum company, ENH, and 90% to Matola Gas Company (MGC).

MGC is jointly owned by ENH and foreign and local investors. MCG sold the gas to industrial companies and to AutoGas, which converts the gas into fuel for cars. MGC transfers its earnings to the national treasury under the supervision of the National Petroleum Institute.

Drilling of Kifaru-1 well in Mozambique begins

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Wentworth Resources has announced the beginning of drilling operations on the Kifaru-1 exploration well by the Helmerich & Payne rig #243 in the Rovuma Onshore Concession in northern Mozambique.

The Kifaru-1 exploration well is targeting Miocene sands, similar to the reservoirs in the Mnazi Bay and Msimbati gas fields in southern Tanzania, as well as Oligocene and Cretaceous sands.

The Kifaru-1 well has a planned total depth of 4,050 meters True Vertical Depth Sub Sea and, based on the current drilling program, is expected to take approximately 70 days to complete.

According to Wentworth Resources Managing Director Geoff Bury a successful drilling will open up more areas in the acreage.

“The Kifaru-1 exploration well is located just south of our discovered natural gas fields in the Mnazi Bay concession and adjacent to recent gas discoveries made offshore. The Kifaru-1 well is testing a large structure which, if successful, could lead to further exploration activities in both of Wentworth’s blocks in the Rovuma Basin,” said Bury.

Wentworth has an 11.59% net interest in this well, which is being operated by Anadarko.

ION Geophysical to acquire 2D seismic in offshore Puntland

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ION Geophysical has announced that it has signed the first of a kind offshore multi-client 2D seismic survey  agreement with the Puntland Petroleum and Minerals Agency.

According to ION Geophysical the survey will help demarcate  a block boundary scheme  for future licensing activity as well as provide more than 7,600 km of pre-stack depth-migrated data to help explorationists gain a better understanding of both the architecture of the sedimentary basins and the hydrocarbon potential of this margin.

The company is banking on the similarities of the geologic analogue in neighbouring Yemen and Oman while the eastern offshore region is also a conjugate margin to India.

The survey currently in the planning phases will thus be testing the presence of a Karoo-aged rift system perpendicular to the coast as well as test the continuation of Mesozoic failed rift basins.

Technical advisor to the Puntland Authority and associate professor at the University of Regina Dr. Osman Salad Hersi says the survey will increase interest offshore Puntland which shares the Indian Ocean shelf of Somalia extending farther southward along the continental margin of Kenya, Tanzania and Mozambique where oil and gas has been discovered.

“This region has been a site of significant hydrocarbon discoveries within the past two years and has attracted the interest of many exploration companies,” says Dr Osman.

Dr Osman adds that the PuntlandSPAN as the survey is dubbed is ‘a well-needed survey that will bolster the interest of the exploration companies and confer significant leverage for the State’s endeavour to license blocks to the oil industry.’

A view shared by director of Puntland Petroleum and Minerals Agency Issa Farah who hopes the survey can open offshore block licensing in the autonomous region.

“This survey will prove a highly valuable tool as Puntland begins to promote future licensing rounds for oil and gas exploration. Although this offshore domain is largely unexplored, the international oil and gas community has recently expressed keen interest in understanding the region’s viability,” adds Farah.

The survey is expected to commence in this second quarter after acquiring environmental and reconnaissance permits.

Mozambique could join Australia, Qatar in league of world’s largest Gas producers

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Mozambique could become the third world’s largest Gas producer after Australia and Qatar should it secure the needed foreign investment in the range of $20Bn to $25Bn according to a study by PriceWaterhouseCoopers.

The study released this week says East Africa will become a focus of the global gas industry with Mozambique and Tanzania leading as the new gas frontiers in the region.

“Large gas finds in both African nations would make the world take note of east Africa as an emerging player in the global industry. A huge obstacle to growth in Tanzania and Mozambique is the cost of the infrastructure required, which neither country can afford without help from foreign investors,” Says the Coordinator of PwC study Chris Bredenhann.

The study lauds ongoing funding and upgrades on infrastructure by the Chinese government and corporations in countries like Mozambique, Tanzania, Ghana and South Africa which it says will make it easier for foreign investors to operate in Africa.

Despite the increased investments PwC warns that the inflow of foreign investment into the continent that has been put at $1 billion every 17 days in 2013 will not reflect in the economies of these nations immediately.

Oil and gas heavyweights including BP, Chevron and Eni have already invested in Mozambique as they position themselves to be at the forefront in presumably Africa’s largest gas region the study adds.

At the same time Mozambique is also expected to rival Australia, the USA and Papua New Guinea as a major gas exporter to Asia once it starts exports in the next five years.

In Tanzania and Kenya the study warns that corruption remains a major hurdle for investors with Transparency International ranking the two at 102 and 136 respectively out of 177 countries.

In the meantime Nigeria, Libya, Algeria and Egypt continue to lead in gas production in Africa with a total annual gas output of 1.8 trillion cubic meters accounting to 90 percent of the continent’s output.

Tembo 1 well plugged and abandoned after minimal success

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After a number of delays Wentworth Resources has announced that drilling operations of the Tembo-1 well have now completed and with the well having reached to a total depth of 4,553 meters (4,401 meters True Vertical Depth Sub Sea) and reached TD in Jurassic aged sediments with petrophysical analysis of the Cretaceous section indicating 11 meters of natural gas net pay.

The natural gas and some condensate was recovered by modular formation dynamics testing confirming the petrophysical analysis.

The Onshore Rovuma Partners do not plan any further evaluation of the Tembo well at this time but will assess all the data recovered from this well to determine the potential commerciality of this discovery.

“The Tembo-1 well was an exciting well and has provided additional information about the Rovuma basin.  We look forward to our continued exploration in the Onshore Rovuma Block with the spudding of the Kifaru-1 well. With our imminent gas production in southern Tanzania on track, 2015 should be a transformational year for Wentworth,” says Executive Chairman Bob McBean.

The Tembo-1 well has been plugged and abandoned and the drilling rig is now being mobilized to the Kifaru-1 well location. It is expected that the Kifaru-1 well, which is approximately 10 kilometers south of Wentworth’s Mnazi Bay Concession in Tanzania, will spud in Q1 2015.

This well is targeting Miocene sands, similar to the reservoirs in the Mnazi Bay and Msimbati gas fields, as well as Eocene and Cretaceous sands.

Wentworth holds a 13.64% participation interest in exploration operations and an 11.59% participation interest in development and production operations of the Rovuma Onshore Concession in Mozambique. Anadarko Petroleum Corporation is operator while other partners include Maurel et Prom, ENH and PTTEP.

 

Atlas Development & Support Services lists on the Nairobi Securities Exchange

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Nairobi-headquartered support services and logistics company Atlas Development & Support Services (ADSS or Atlas cross listed on the Growth Enterprise Market Segment (‘GEMS’) of the Nairobi Securities Exchange, having successfully raised KES 450 million (US$5 million) through a private placement to Kenyan investors.

According to Atlas CEO Carl Esprey the listing hopes to tap from the growing opportunity in the region as well as leverage on local content.

“The strong interest from Kenyan investors is recognition of the opportunity to create a world class development and support services provider in Eastern Africa. We have demonstrated robust financial performance, world class service delivery and regional scale to position Atlas as the best way to gain exposure to this opportunity,” says Esprey.

The funds raised in the placing will be used to provide additional capital for organic growth and acquisitions around Atlas’s support services offering in Kenya and the region.

The placing, which was offered solely in Kenya, was completed through the issue of 39,139,827 new ordinary shares at a price of KES 11.50 per share (being 8.13p, in line with the closing price of the Company’s shares on AIM on 20 November).

Andrew Wachira, Acting CEO, NSE says, “The cross listing of Atlas is another major step towards our goal of ensuring that companies that have substantial operations in Africa are accessible to both Kenyan and international investors. This cross listing is historic for our exchange and it is directly in line with Vision 2030, which envisions that the growth in Kenya’s natural resources industries will also help grow our financial institutions.”

“The cross listing further justifies Kenya’s stance that its financial market remains very attractive to both local and international investors. ” adds Mr Wachira.

Atlas recently commenced construction on a KES 180 million (US$2 million) planned investment to build a logistics hub in Lokichar, Turkana County. This will help companies and government operate more effectively across the Turkana basin.

Atlas has invested KES 1.4 billion (US$ 15 million) in Kenya over the last 12 months and plans to invest over KES 4.5 billion (US$ 50 million) in Kenya over the next five years.

Carl Esprey says, “We’re Kenyan-headquartered and our core operation was founded here in Nairobi. Today we’re proud to also call ourselves a Kenyan-listed company. The cross listing will provide further local support for Atlas and represents a natural alignment with our Kenyan stakeholders and customers.”

The shares have been offered today on the GEMS market – at a price of KES 11.50 (8.13p) per share – a slight discount on London.

Edward Burbidge, CEO says, “This cross listing is a very exciting transaction for both the Nairobi and London financial markets. Here in Kenya it will provide investors with a unique opportunity to gain exposure to this sector in Eastern Africa, through a company that has 100 per cent of its shareholder register tradable in both Nairobi and London.”

Burbidge Capital acted as placing agent and Nominated Advisor to the placing and cross listing.

Atlas provides international standard turn-key development and support service solutions to multiple sectors, including oil & gas, mining, geothermal, construction and infrastructure. It employs over 700 Kenyans in delivering engineering, infrastructural development projects and workforce accommodation solutions in Kenya, Tanzania, Djibouti, Mozambique and Ethiopia.

India and Mozambique Government MoU to Enhance Cooperation in Oil and Gas field

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Indian minister of State for Petroleum & Natural Gas Dharmendra Pradhan and Mozambique Minister of Foreign Affairs and Cooperation Mr. Oldemiro Julio Marques Baloi recently signed a memorandum on cooperation in the field of Oil and Gas in a ceremony at the ONGC registered office at New Delhi.

The MoU aims to establish a cooperative institutional framework to facilitate and to enhance bilateral cooperation in the oil and gas sector with the Mozambique Minister terming the signing a milestone in a long relationship.

Pradhan said that both the countries have traditional links which have grown from strength to strength over the years. He added that Indian public sector companies have participating interest in Mozambique’s Gas fields and sought cooperation from the Government of Mozambique in this regard.

ONGC Videsh Limited (OVL) and Oil India Limited (OIL) has 10% participating Interest in the Rovuma Area 1 offshore Block, Mozambique after acquiring 100% shares of Videocon Mozambique Rovuma 1 Limited, the company which acquired 10% PI in the Area 1 from Videocon Mauritius Energy Limited.

Other partners in Area 1 include Anadarko (operator of the project), ENH, Mitsui, Indian owned BPRL, and PTTEP.

South Africa, Mozambique Governments Sign Agreement to Evaluate Viability of a Gas pipeline

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South Africa’s Public Investment Corporation SOC Limited (SacOil) and the Instituto de Gestão das Participações do Estado (“IGEPE”) in Mozambique (have signed a Joint Development Agreement to evaluate the technical and commercial feasibility of a transnational terrestrial gas pipeline and distribution facility that will carry natural gas from Mozambique’s Rovuma fields into South Africa, with off-takes to other neighboring Southern African Development Community (SADC) countries.

Under the Joint Development Agreement  (JDA) effective date is 03 December 2014, the JDA Partners will work together to evaluate the viability of the Project with feasibility studies covering engineering, market development, gas purchasing, economic, financial, technical and commercial risk profiles as well as environmental, social and regulatory issues.

Currently the JDA partners setting up a technical working group to commence pre-feasibility studies with a project company to be incorporated to ensure that total focus on the Project is maintained and emphasis will be placed on local ownership of businesses along the entire value chain.

The project comes in the back of continued energy shortages in South Africa and plans by the country’s government to reduce CO2 emission levels and to increase the use of natural gas from the current 3 percent to near the global average of 21 percent.

South Africa also plans to convert an array of ageing coal-fired power stations to gas as well as build new stations in Coega and Richards Bay.

The project also expects  the demand for natural gas is also expected to grow in Botswana, Malawi, Mozambique, Zambia, Zimbabwe and Africa in general especially fuelled by gas-fired power stations, vehicle and related downstream industries and domestic consumption.

Should the project kick off the 2,600km main pipeline from northern Mozambique to South Africa will, en route also deliver gas to key towns and settlements in all provinces of Mozambique, thereby stimulating industrial growth in the country.

“The Mozambique gas project is key for the economic transformation of Southern Africa. Our participation is in line with SacOil’s long term strategy of being a leading Pan African oil and gas company,” says SacOil’s CEO Dr Thabo Kgogo.

The project is estimated to cost $6 billion and has the ultimate objective of making energy affordable to a greater proportion of the population, promoting clean energy, reduce oil import bills, lower carbon footprint and carbon tax, all of which are challenges experienced by the economies of southern Africa.

The Project will also seek to increase the international competitiveness of southern African economies, create many jobs and improve living standards for the people of the region.