(2015-05-20) The land use title (DUAT) granted for the construction of a liquefied natural gas (LNG) factory on the Afungi Peninsula, in the northern Mozambican province of Cabo Delgado, is illegal according to an independent judicial assessment, cited by the recently established Civil Society News Agency.
The assessment, ordered by the Civil Society Platform on Natural Resources and the Extractive Industry, was made in January and needs to be taken seriously since the team of jurists was led by one of the most respected figures in the Mozambican judiciary, retired Supreme Court judge, João Carlos Trindade. He was assisted by lawyers Lucinda Cruz and André Cristiano José.
The DUAT was awarded by the Ministry of Agriculture to the company Rovuma Basin LNG Land Limitada (RBLL) which was set up in 2012 by Anadarko Mocambique Area 1 (AMA1) and by the publicly owned National Hydrocarbon Company (ENH). Anadarko heads the consortium exploring for hydrocarbons in Area 1 of the Rovuma Basin, off the coast of the Cabo Delgado district of Palma, where reserves of at least 75 trillion cubic feet of natural gas have been discovered.
RBLL was formed to acquire a DUAT for an area of 7,000 hectares in the Afungi peninsula where the LNG factory will be built. Trindade’s team argues that, under Mozambique’s Commercial Code it is not legitimate to set up a company merely to acquire land rights.
A commercial company, under the terms of the Code, must have as its object some kind of productive economic activity, and Trindade’s team did not believe that this could cover acquiring a DUAT for an activity that a different company would undertake. That would be much the same as forming a company to acquire a permit for an activity, but not to undertake the activity itself.
RBLL has not signed any contracts with the communities and individuals already occupying the Afungi Peninsula. Such contracts would not cover the land itself (which, under the Mozambican constitution, is state property) but anything which the communities have built on the land.
Furthermore the existing land rights of the people living on the peninsula have not been suppressed, which would be necessary before issuing a DUAT to RBLL.
RBLL would not use the land itself, but would sign contracts with other companies (presumably the Anadarko-led consortium) to use the DUAT. This, the legal team argues, violates the constitution and the land law.
The arguments may seem arcane, but Trindade’s team believes the illegalities are serious enough for the DUAT awarded to RBLL to be challenged in court.
A court case would seriously complicate matters for the Anadarko consortium, and might conceivably delay work on building the LNG factory.
The major beneficiary of this would probably be the Italian energy company ENI, which operates Rovuma Basin Area Four, where even larger amounts of natural gas have been discovered. ENI does not need a DUAT, since it has abandoned the idea of building a plant on the Afungi Peninsula.
Instead ENI has plans for building a floating LNG factory anchored off the Cabo Delgado coast, and much closer to the gas deposits than a land-based facility.
If Anadarko becomes ensnared in legal problems, then ENI may be first to ship its LNG to the markets in the far east.
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