Gas: 2nd largest reserve in Africa; tax deal on Cove Energy sale

 Mozambique now has the second largest gas reserves in Africa (after Nigeria), and perhaps the 11th largest in the world, after new finds announced this week. New finds in the Rovuma Offshore, Area 1 block off the coast of Cabo Delgado have boosted recoverable gas reserves from 30 trillion cubic feet to 50 trillion, the Texas-based Anadarko Petroleum said on 15 May.

And ENI announced the next day that its new finds in Area 4 had raised its recoverable gas to 50 trillion cubic feet. Exploration in this massive gas field is continuing.

Anadarko is the operator of Area 1 and holds a 36.5% share; co-owners are Mitsui of Japan (20%), BPRL Ventures and Videocon (both of India, with 10% each) and Cove Energy of Britain (8.5%).

The Mozambican government is represented by Empresa Nacional de Hidrocarbonetos with 15%.

Cove has put itself up for sale in an ongoing auction. Mozambique said the value of Cove was entirely Mozambican gas in the ground, and demanded a share. After Mozambique gained nothing from the sale last year of Riversdale Coal to Rio Tinto, the government has taken a hard line and demanded a share of all such transfers. Legal experts say there is nothing in Mozambican law requiring such a payment, but it appears that such sales require the approval of the Mozambican government. Lawyers are now drafting revisions to the mining and minerals laws to try to formalise capital gains tax payments in the future.

The Ministry of Mineral Resources said in February that the Talbot Group of Australia had negotiated an agreement to pay a capital gains tax of 40% when it sold its 59% stake in Minas de Revuboe in Tete, giving government $77 million. After some negotiations, Cove offered to pay the government a 12.8% capital gains tax on the sale, and this was accepted last month. This could mean up to $200 million going to the government. Neither 40% nor 12.8% has any basis in the law, and these are negotiated figures.

In April Royal Dutch Shell bid $1.8 billion for Cove Energy, matching an earlier offer by the Thai state oil company PTT. This valued Cove shares at £2.20. But the Anakardo statement pushed Cove shares up to $2.28, so a new round of bidding is expected.

Fonte: MOZAMBIQUE 196 - News reports & clippings – 18 May 2012