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Esperanca Bias, minister for mineral resources, Mozambique

01 Feb 2014

In the last decade, Mozambique has emerged as one of the world’s fastest growing economies and there have been significant discoveries of natural gas, mainly offshore. Plans to monetise these reserves include construction of pipelines and a liquefaction plant to enable exports. The country plans to produce 34 million tonne of LNG from the Rovuma Area 1 offshore block. To be produced by the end of 2018, this LNG equals to 136 million standard cubic meters per day of gas, which is 50 per cent more than India’s current gas output. Mozambique’s minister for mineral resources, Esperanca Bias, speaks to Neeraj Dhankher and Deepak Sahu on what lies in store for the world. Excerpts:

When is the fifth oil and gas bidding round of Mozambique expected to be launched?

It depends on the approval of law by Parliament. We don’t want to start discussions and then change track because of updating of the law. I know that private sector and companies are willing to have this bidding round. But I promise that as soon as Parliament will approve the law, we will launch a bid.

What is the proposed amendment to the petroleum law of Mozambique?

We feel some gaps in the law. The existing provisions are being reviewed to include LNG along with some other small issues.

When is the proposed amendment likely to be approved by Parliament?

My expectation is that Parliament might approve it in the next session which starts in February. I hope so.

How many oil and gas blocks will be put up for bidding?

We are still examining if we will launch blocks all over the country. The number of blocks to be launched will depend (on a lot of factors).

When is the first gas expected from LNG project in Mozambique?

We are discussing with main concessionaire- Anadarko and ENI. As you may know, we are holding discussions to make sure that in 2018 the first gas comes out. We are working hard to make it possible because we know the market is nervous about that.

Are you in talks with other countries for the same?

We are discussing with companies from countries such as India, Japan and even Mozambique.

LNG deals are mostly commercial deals. Why is the Mozambique government keen to play a role in such deals?

We have Mozambique companies which will be part of LNG projects and these will be public sector companies.

Is there any new tax which the Mozambique government is looking to levy in near future in domestic oil and gas sector?

I cannot say that as of today. Even if there is such a tax, we are always discussing with private sector to make sure that we do not create obstacles for investments.

What is the proposed capacity of the LNG plant?

Minimum will be two trains of 5 mmt each. But it depends on the market and the capacity to attract investments.

How much LNG has India expressed to offtake from Mozambique?

It is early to say how much we will sell to India. It will depend on the negotiation. If India asks for 10 mmt, we will work together to achieve this goal. If India needs 5 mmt, we will work on that. So it depends on the negotiation.

And at what price?

I believe it may be close to $16 per mmbtu.

Talking of coal blocks, when does the Mozambique government plan to auction coal fields in the fourth bidding round?

We will launch a bid soon, probably this year. And Indian companies will be invited to be a part of it. It will depend on how the companies are doing work properly. I’m waiting to see what Coal India Limited (CIL) is doing. Not only CIL, but other Indian companies in Mozambique as well. We hope that CIL will say that in two years we will start production. We are looking at what the companies have done so far. Some coal blocks will probably be revoked as some companies are sleeping on them. These blocks will then be put in the market through our bidding round.

Are there any plans to allocate coal blocks to Indian companies on the lines of CIL on government-togovernment basis?

No, when we have the blocks available, we will launch the bid. To make sure we will get good investors, we prefer to launch the bid.

But are there ample coal reserves in Mozambique for exports?

Yes. At present we have more than 20 companies looking for coal. It means that potential is there and we need to do more exploration to increase our reserves.

What is your assessment of Coal India with respect to work conducted by it on the two coal blocks allocated?

CIL is doing some exploration activities. I don’t have the report but I believe they are doing well.