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OVERVIEW OF THE UPSTREAM PETROLEUM SECTOR OF MOZAMBIQUE
December, 2nd 2010
INSTITUTO NACIONAL DE PETROLEO ‐ INP
By: Arsénio Mabote
Introduction to Mozambique
OUTLINE
Challenges
Natural Gas Project
Database
Petroleum Activities
Legal Framework
INTRODUCTION
INTRODUCTION TO MOZAMBIQUE
Location: South‐eastern Africa
Land area: approximately 800,000 Sq.km
Coastline: Approximately 2,700 Km
Onshore Sedimentary Area: 290,122 Sq.km
Offshore Sedimentary Area: 282,227 Sq.km
Natural Resources: Hydropower, natural gas, coal, minerals, raw wood, agriculture
Export: natural gas, prawn, cashew, sugar, tea, coconut oil and cotton
Capital: Maputo (2 million people)
Population: 21.8 million (2009)
President: Armando Emilio Guebuza
Official Language: Portuguese
The Petroleum law is the legal foundation for the governance structureof petroleum activities, clarifying roles and interests:
Commercial Interest
Resource owner
Regulator
MIREM
LEGAL FRAMEWORK ‐ PETROLEUM OPERATIONS
Is the regulatory authority for the petroleum operations (exploration, production and transport of hydrocarbons).
MOZAMBICAN PETROLEUM INSTITUTIONS
Mission
To manage the petroleum resources of Mozambique and administer the related operations for the benefit of the Society, and in compliance with the existing laws, government polices and contractual commitments.
Vision
As the Regulatory Authority for petroleum exploration and production, ascertain that petroleum operations are conduced in accordance with laws, regulations and international best practices, with special emphasis on optimal resource management, health safety and the protection of environment
ENH ‐ National Hydrocarbon Corporation
Is the state oil company established by the Law 3/81Formerly with exclusivity rights, is now mainly commercially focusedParticipates as a stakeholder, in the natural gas projectParticipates in the exploration, with carried interest, in association with oil companies inexploration.
Mission
To develop into a competent petroleum company with a profitable portfolio of business activities ranging from Oil & Gas E&P, Gas Transmission, Distribution and Gas Utilization, mainly within Mozambique but also including neighboring countries if feasible
Vision
Optimize the value that can be generated for Mozambique through commercial participation in Exploration & Production as well as in the total Petroleum Value Chain
o ENH has two affiliated companies (CMH & CMG)
MOZAMBICAN PETROLEUM INSTITUTIONS
Exploration StrategyTo maximise value creation from the petroleum resources in the country.
Licensing PolicyLicensing through open bidding roundsAccess to data / prepared data packages Sufficient time/resources for promotion
Main Requirements
Technical expertise and financial capacity including competence and experienceof applicant’s former activities ( ex: Deep Water and HSE)
SECTOR STRATEGY
LEGAL FRAMEWORK
DEVELOPMENT OF MOZAMBICAN REGULATORY SYSTEM NEW MOZAMBICAN EPCC BASED SYSTEM
http://www.inp.gov.mz
Petroleum Law
LegendAdministrative lawContract law
Core Elements of the Legal and Regulatory structure:
Petroleum Law 3/2001
Petroleum Regulations ‐ 2004
New Model Exploration and Production Concession Contract – 2005
Fiscal Law on Petroleum activities ‐2/2007
Mining and Petroleum incentives ‐13/2007
TAXATION %Income Corporate Tax 32 %
Dividends Tax 18 %
VAT 17 %
Royalty - Gas 6 %
Royalty - Oil 10 %
MACROECONOMIC INDICATORS
FISCAL REGIME
PETROLEUM LAWPetroleum Law
Applies to petroleum Operations and exclude refining of petroleumEstablishes the regime for granting of rights for the conduct of Petroleum
Operations Onshore and Offshore of Mozambique
Ownership and control of petroleum resourcesAll petroleum resources in situ as natural resources in the soil and the subsoil, in
interior waters and in the territorial sea, on the continental shelf and in the exclusive economic zone are the property of the State
State participationThe State reserves to itself the right to participate in petroleum operations in which
any legal person is involved
Award of rightsNew petroleum legislation in 2001 set up a Concession systemPublic Tender (preferable method)Simultaneous or direct negotiations
TYPES OF CONCESSION CONTRACTSReconnaissance Contract
2 years
Survey studies, with wells up to 100 meters
Exploration and Production Contract
Exclusive right to conduct petroleum exploration and production as well as a non‐
exclusive right to construct and operate oil or gas pipeline systems
The exclusive exploration rights shall not exceed 8 years, and shall be subject to
provisions concerning abandonment. The exclusive right to develop and produce shall
not exceed 30 years, dating from the date of approval of PDO
Oil and Gas Pipeline Contract
Grants the right to construct and operate an oil or gas pipeline for the purpose of
transporting hydrocarbons
PETROLEUM ACTIVITIES
MOZAMBIQUE SEDIMENTARY BASINS
1/3 of continental territory covered by sediments
2/3 covered by igneous and metamorphic rocks.
Passive Continental Margin basins:Rovuma Basin – 29.500 Sq Km
Mozambique Basin – 500.000Sq.km
Graben and Rift basins
Maniamba BasinLake Niassa BasinLower Zambeze GrabenMiddle Zambeze Basin
Onshore – 275.000 Sq KmOffshore – 225.000 Sq Km
Onshore – 17.000 Sq KmOffshore – 12.500 Sq Km
EXPLORATION HISTORYROVUMA BASIN
1983‐1987 – ESSO/SHELL joint concession.
1994‐1995 – NL (Mopet) onshore/offshore concession of about 38,000 sq km.
1995‐2001 – LONROPET onshore/offshore concession (30,000 sq km)
2000 – Offshore deep water speculative seismic (Western/Geco)
2005 – Licensing Round
2006 – EPC with Hydro/ENH, Anadarko/ENH, ENI/ENH
2007 – EPC with Artumas/ENH
2008 – EPC for areas 3 & 6
2009 – 1st offshore exploration well
2010 – 1st Natural gas discovery & 1stoil shows ‐ Area‐1, Deep Water
MOZAMBIQUE BASIN
1904‐1920 ‐ Early Exploration
1948‐1974 – Concessions to GULF, AMOCO, SUNRAY, HUNT and AQUITAINE
1981‐1982 – First Spec seismic campaigns (Western/Geco) and stablishment of ENH
1984‐1986 ‐ PSA’s with BP, AMOCO, ESSO/Shell
1998 ‐ PSA’s with BP, Norbay, Scimitar, ARCO, SASOL
1999 ‐ 2004 – PSA with Sasol Petroleum International for Temane & Pande Areas.
2002‐2005 – EPC with Petronas/ENH, DNO & SASOL/ENH.
2006 ‐2009 – EPC with BANG, ENH
2010 – EPC with SASOL
OFFSHORE ROVUMA BASIN TERTIARY DELTA PLAYS
Backthrust
Toethrust
Compressional anticline
MOZAMBIQUE BASINPOTENTAIL PLAYS – OFFSHORE ZAMBEZI DELTA
Volcanics
Thrust fault
Transpressional flower structure Listric faults with associated roll over anticlines
Compressional anticline
Post thrust listric faults & slumps
Large hangingwall anticlineBlind thrust‐ does not propogate into L Grudja
Stratigraphic potential in Lupata
Lupata
Domo Sq
L Grudja
Paleogene
Neogene
Reverse faults
Mozambique Basin
1961 – 1st Discovery – Pande1962 – 2nd Discovery – Buzi1967 – 3rd Discovery – Temane2003 – 4th Discovery – Temane East2003 5th Discovery – Inhassoro2008 – 6th Discovery – Block 16&19
Rovuma Basin
2010 – 3 Deep water Gas Discoveries – Area 12010 – 1 well with oil shows – Area 1
DISCOVERIES
2nd Licensing Round (Rovuma Basin) ‐ 2005
3rd Licensing Round (Mozambique Basin) ‐ 2007
4th Licensing Round (Onshore Basin) ‐ 2009
MOZAMBIQUE LICENSING ROUNDS
DATABASE
Total of 126 wells drilled (onshore/offshore):
71 wells – wildcat
24 wells – production
31 wells – appraisal
Total of Acquired Seismic
Approximately 114.000 km of 2D seismic acquired
from 1960’s to 2010 (onshore/offshore)
Approximately 15.000 Sq. km of 3D seismic
acquired from 2007 (offshore)
2D/3D SEISMIC COVERAGE AND WELLS
OFFSHORE GRAVITY DATA
Non‐exclusive gravity and magnetic data
available
SM81
MBWG98
MBWG99
MBWG2000
ON/OFFSHORE GRAVITY & MAGNETIC DATA
Gravity profiles Magnetic coverage