Mozambique: Public, private funds to be used in $80 billion Energy Transition Strategy
Mozambique’s Public Integrity Centre (CIP) NGO says the Mozambican state may not get “significant revenues” from South African company Sasol’s light oil and natural gas exploration projects in Pande and Temane in the south of the country.
“Considering the terms of the agreement and the experience of the [previous] Oil Production Agreement [PPA], the CIP thinks that conditions are right for a déjà vu experience, with the Sasol group benefiting and the Mozambican state left without significant revenue,” is the conclusion of an analysis titled “Temane Natural Gas and Inhassoro Light Oil – Revenue Perspectives for the State Are Gloomy”.
The CIP notes that Sasol’s 22 percent recovery factor for light oil is well below the world average of 40 percent, while its gas recovery factor of 70 percent is acceptable, equating to the world average.
“Taking into account the previous experience of the PPA, which had a capital increase of around 60 percent, the CIP is concerned that the stated capital may unjustifiably skyrocket during project development, as a strategy for minimising revenues to be paid to the Mozambican state,” the study said.
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The CIP thinks the figure of US$400 million that Sasol says it spent on the first phase of the Central Processing Unit expansion is astronomically exaggerated.
“Even before considering the aspect indicated above, the Development Plan presented by Sasol was already problematic in the economic component, because it did not present positive results, since the investment expenses are higher than the expected revenues,” the analysis says.
The CIP, the text continues, has reservations about the socio-economic impact, noting that local opportunities have mainly benefited South African companies, and Mozambican companies only marginally.
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“The few Mozambican companies that benefited from these opportunities are based in Maputo and almost all of them linked to the country’s political-economic elite,” it notes.
According to the CIP, “any legal framework making the use of local companies for the supply of goods and services imperative is lacking”.
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Last week, the South African company Sasol announced that it successfully drilled and tested four light oil and two natural gas wells in Inhambane province, southern Mozambique.
In a statement, it noted that the sites were part of a set of 13 wells to be drilled, in an investment worth about US$384 million dollars (EUR 325.8 million) so far.
“Gas reserves in accordance with expectations have been found In Mozambique,” the statement said.
The gas fields that Sasol is exploring in Inhambane could join the gas reserves the company has been exploiting for more than two decades in Temane and Pande in the same region.
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