Portugal’s Galp takes step to start arbitration over Mozambique capital gains tax dispute

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Portugal’s Galp takes step to start arbitration over Mozambique capital gains tax dispute

11:01 CAT | 07 Oct 2025

FILE - The Area 4 concession includes the operational Coral South Floating LNG (FLNG) facility, the planned Coral North FLNG development, and the planned Rovuma LNG onshore facilities. [File photo: AIM]

Galp says it has formally notified the State of Mozambique of a dispute under the international reciprocal promotion and protection of investments.

The company will request an assessment of the Mozambican State’s conduct in relation to the capital gains tax dispute arising from the sale of its stake in Mozambique’s Area 4.

Portuguese energy company Galp Energia announced on Tuesday that it has formally taken the first step towards resolving its dispute with Mozambique’s tax authorities through an international arbitration tribunal, in a process concerning the amount of capital gains tax due.

“Galp will seek an assessment of the conduct of the Mozambican State regarding the dispute over capital gains tax arising from the sale of Galp’s stake in Area 4 of Mozambique; this notification marks the first step towards initiating the arbitration process,” the company stated in a press release issued this morning to the Portuguese Securities Market Commission (CMVM).

The “dispute under the international reciprocal promotion and protection of investments” has also been communicated to the President of Mozambique, Daniel Chapo, in a letter sent by the Portuguese energy company, which sets a deadline for both parties to reach an agreement.

At issue is the amount of tax payable by the Portuguese company following its withdrawal from the consortium that operates Area 4 of the Rovuma Basin, which Galp sold in March to a subsidiary of the Abu Dhabi National Oil Company (ADNOC) for US$1.05 billion.

The amounts are not specified in Galp’s statements to the market and the press, but in June, the newspaper Diário de Notícias reported that the Mozambican Tax Authority (AT) considered the Portuguese company liable for US$300 million, while Galp maintained that the correct amount was around US$8 million.

In its statement, Galp said it “has shown full willingness to comply with all tax obligations and to find a path to mutual understanding,” adding that “resorting to legal mechanisms, both national and international, is a step the company is compelled to take, although it has always sought to avoid it, preferring a constructive dialogue with the Mozambican authorities in order to clarify the matter.”

READ: ADNOC makes first foray into Mozambique with 10% stake in GALP concession – Reuters

Area 4 is operated by Mozambique Rovuma Venture (MRV), a joint venture formed by Eni (50%), CNPC (20%), Kogas (10%), ENH (10%) and ADNOC’s subsidiary XRG (10%).

The Area 4 concession includes the operational Coral South Floating LNG (FLNG) facility, the planned Coral North FLNG development, and the planned Rovuma LNG onshore facilities.

Last week, the consortium led by Italian energy group Eni signed with Mozambique the Final Investment Decision (FID) for the second floating liquefied natural gas platform in the Rovuma Basin, Coral Norte, worth US$7.2 billion.

Mozambique expects to earn US$23 billion over 30 years from the Coral Norte project, the second FLNG (Floating Liquefied Natural Gas) platform operated by Eni for the production of Liquefied Natural Gas (LNG) in the Rovuma Basin, offshore Cabo Delgado province

Source: Lusa