Mozambique’s natural gas contracts “problematic” – CIP

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(2015-11-17) The Centre for Public Integrity (CIP), the NGO that oversees the integrity of state governance in Mozambique, considers the contracts that the government is negotiating with US oil company Anadarko “problematic”.

In a study released at the weekend, the CIP says that the National Hydrocarbon Company (ENH), representing the Mozambican state in natural resource projects, will only start to receive dividends from the consortium with Anadarko 20 years after the start of liquefied natural gas (LNG) production, because of the inability of the Mozambican public company to underwrite the project’s costs.

“In addition to seeking funding for their participation, Anadarko has to seek funding for ENH. Anadarko will have to convince its shareholders on the viability of aiding ENH. The evidence of viability includes, in addition to normal capital costs, the return clause covering the associated risk,” considers the NGO.

“This may be a prudent measure by the Mozambican government, but it is problematic because it will end up being very costly to the state”, the analysis maintains.

Noting that the consortium led by Anadarko needs to raise 20 billion dollars (about EUR 19 billion) for the construction of LNG plants, CIP estimated that 1.5 billion dollars (about EUR 1.4 billion) of the investment is the responsibility of ENH.

The Anadarko consortium holds the concession in an area of the Rovuma basin, in Cabo Delgado province, northern Mozambique, where large gas reserves have been discovered, and is currently in the process of raising funds to move to the project development phase.

In addition to the Anadarko consortium, a consortium led by Italy’s ENI also holds a natural gas concession in the area, and is also on the process of seeking funds.

Source: Lusa

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