Focus: Energy Blocks



May. 9, 2013

With the major discoveries of natural gas in the Rovuma Basin, the Mozambican government has been tendering contracts for companies to develop the available blocks.

In Cabo Delgado, the reserves are split into seven blocks, which are operated by four companies: Anadarko, Eni, Petrollam Nasional Berhad (Petronas), and Statoil. Anadarko and its partners are working on Area 1, which is split into two sections: onshore and offshore. The offshore block has an estimated 32-65 tcf of recoverable natural gas split between two fields: Atum and Goldinho Complex and the Prosperidade Field. There are nine wells in the Prosperidade field and six in the Atum and Golfinho Complex. Area 1 is part of the Rovuma Basin. Areas 2 and 5 are also a part of the same basin, with these blocks operated by the Norwegian company Statoil. The company began test drilling in April 2013, under a terms of concession contract signed with the Mozambican government signed in 2006. The contract is set to last eight years with a total investment of $200 million. Area 4 is operated by Eni, which has a 70% stake in the block. In March 2013, China National Petroleum Corp (CNPC) bought a 28.57% stake in Eni's East Africa subsidiary for $4.2 billion. This is not the first stake in an oil field that CNPC has bought in Africa, with gas fields from Nigeria to Uganda now in its portfolio. Eni and CNPC say there is an estimated 75 tcf of gas in Area 4. In 2008, Petronas in a joint venture with the National Oil Company of Mozambique (ENH) and Total signed an exploration and production concession contract (EPCC) on Areas 3 and 6. Petronas will be the operator with a 50% share, while Total has 40% and ENH the remaining 10%. The blocks lie at a depth of 2,500 meters, which will require specialized technology to allow the area to be explored and developed.

In Sofala Province, the majority of the blocks are operated by South African company Sasol. The company was also looking to expand its operations into the Rovuma Basin by battling to buy a stake in Eni's Area 4, but lost out to CNPC in the end. Sasol spent $400 million upgrading the operational onshore Pande and Temane facilities to increase its production from 300 million standard cubic feet to 450 million. ENH also has a 25% stake in the Pande and Temane blocks of which 15% of the production stays in the country. Sasol has also been carrying out feasibility studies on the Sofala, M-10, and 16/19 blocks where it believes there are significant prospective reserves. The remaining block in the Sofala province is the Buzi block, which will be operated by Indonesian company Buzi Hydrocarbons in partnership with ENH. The two companies plan to start prospective studies in September 2013, where previous studies have suggested the existence of small quantities of natural gas. The studies in September will be aimed at reassessing whether the block is commercially viable.

Mozambique's gas blocks are in high demand from all the major oil and gas companies. New licensing rounds were scheduled for the first quarter of 2013, but they have been delayed until later in the year. The new licenses will include the southern part of the offshore Rovuma Basin and possibly the Zambezi Delta as well. Officials previously suggested that there would be 12 blocks up for offer, with at least three in the gas-rich Rovuma; however, the final locations and number of blocks has yet to be fully decided.