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NEWSLETTER NR. 20
NATURAL RESOURCES
welcome to the twentieth edition of Dear reader,magazine En- IN MOZAMBIQUE: the electronic ergy & Extractive Industry Mozambique, and by the way the last fortnightly edition of this year. When it comes to natural resources presupposes people speak about the wealth that abounds in the basement, but talking about wealth implies also talking about greed, power, possession, gluttony, groups of interests, in conclusion there are numerous adjectives that could be mentioned here. But above all these elements, there is a phenomenon that is very important to point out: the risks management; without it all this wealth could crumble. In Mozambique, arises the debate about the FEARS and QUERIES arising from the exploration of natural resources that is worth reading here. As curiosities we have made a survey of the potential risks related to this phenomenon called natural resources exploration. We would also to invite our dear reader to observe one of the essential environmental principles which is the principle of prevention and precaution. To what extent are the megaprojects empowering mozambican people? This is another debate regarding to a greater contribution of mega projects that dominate the media stage again, for this, the Mozambican PrimeMinister, Alberto Vaquina, came in public to say that future mega projects will have few tax incentives. Merry Christmas and Happy New Year Happy Reading!
The debate about the exploration of natural resources in Africa triggers fears and inquiries over and over again. On one hand, questions regarding who will benet from the exploration of natural resources, on the other hand, fears about the resource curse, several times mentioned on our newsletters. No wonder that African continent keeps collecting examples that induce these fears and anxieties: take the cases of Nigeria, Democratic Republic of Congo and Sierra Leone.
Fewer incentives for future mining and oil Megaprojects, says Vaquina
and more...
Pag. 6
BUT what is the common denominator in these cases of staggering exploration of natural resources? The cornerstone is that in these countries the policy framework does not allow natural resources exploration r to answer the needs of populaanswe tions. Unfortunately, invariably Un the rulers appetites derail the rulers main guidance that should be given to exploration of natural resources which should be to aim at general social development. This situation leads to endless conicts with a single justication: The derived in-
come redistribution is neither equitable nor fair. This is in essence the main issue affecting all natural resource rich developing countries . Mozambique is just one of
them. The good examples show us that to maximize chances of success, the answer to these questions should be given even before the country enter this great adventure. This includes dene the main players in the game, the management and governance model, the priority sectors to invest the revenues collected, and risk management (economic, social, environmental). Mozambique has the opportunity to learn from those countries that were able to manage their natural resources and also with countries that have plunged in conicts. Both references give us the possibility to follow a path of conicts prevention and sustainable development. Mozambique is in its early stage of natural resources exploration! This is the most common response given by ofcial institutions and political personalities including the president but it should be noted that this is an opportunity not to be wasted. As the saying goes Prevention is better than cure. It is never too late and actually this is the right moment to elaborate an informed and intelligent national strategy on this critical issue which may well be the next, greatest and why not, only opportunity in many decades to come, to bring our country
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S O C IA O S E O C T O MO R D A A M E N BIC E A R N G IA A & PA IN R A D OD S E T S R IA E N V E O X LV T R I A C ME T IV N T A O
News
Cont. pag. 1
into development levels comparable to successful nations outside our continent. It would be worrying if these concerns would be addressed in 50 years; most likely there would not be much to be done at that stage, unless a rampant attempt to address the mistakes of an irresponsible past.
Its unavoidable and also legitimate for Mozambicans to seek answers about the countrys prospects in the exploration of natural resources. Some frequently asked questions are: Is the leadership being transparent enough? Which consequences can result from the lack of transparency and clarity in the redistribution of revenues from the sector of natural resources? Are the several economic groups of interests taking into account the
poverty that the majority of Mozambicans are subjected? Clearly, a possible answer to these questions would be a good start towards sustainable resources management in Mozambique. The aim now is to see our country making the difference and showing to the world that natural resources are blessings and not a curse, that natural resources represent the progress and development and not conicts, we have said!
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production of Moma. The Kenmare said that the drop in prices is due to stocks reduction process that, once completed, probably in the second quarter of 2013, will lead to the gradual increase in demand and in consequence of the prices of ores extracted by the company.
BUSINESS / MARKETS:
Em comunicado divulgado quarta-feira, a Baobab Resources informou ainda que o acordo de parceria, estabele-
News
Mozambique: ENI discovers additional 170 billion cubic meters of Gas in the Rovuma basin
Italian oil company ENI Spa said it has discovered new gas resources amounting to an additional 170 billion cubic meters, or 6 trillion cubic feet, of gas in Mozambique.
THE COMPANY said the discovery was made in Mamba South 2 and Coral 2 delineation wells. The full potential of the Mamba complex in Area 4 is estimated at 2,115 billion cubic meters or 75 trillion cubic feet, of gas in place, ENI said. Eni said it plans to drill at least two further delineation wells, Coral 3 and Mamba South 3, in order to assess the full potential of the Mamba Complex discoveries. Eni is the operator of Area 4 with a 70% participating interest. The other partners of the joint venture are Portuguese company Galp Energia, KOGAS and Mozambican Empresa Nacional de Hidrocarbonetos (ENH), each holding 10%.
BriEFs
ANADARKO IN TUG OF WAR:
Africa Energy Intelligences sources in Maputo say the Mozambique government has discreetly rejected a draft of the front end engineering design (FEED) for a future LNG plant at Cabo Delgado that Anadarko submitted a month ago.
SWEDEN/ MOZAMBIQUE:
STOCKHOLM to invest in dams as Sweden is to put up $14 million towards restoration of two dams, the 50 MW dam at Mavuzi and that of Chicamba.
CMPC/BGP INTERNATIONAL:
The subsidiary of China National Petroleum Corporation (CNPC) specialized in geophysical exploration, BGP International, has just created a company in Mozambique, BGP Moambique.
News
ENERGY:
province of Tete until 2016, incidentally in the same province where HCB. The venture is expected to produce 1,500 megawatts of energy for domest tic consumption and for southern African c countries and even to reduce the negative impacts of climate change. The promotion of the project is the responsibility of the Special Purpose Vehicle company contracted by the Mozambican government for the purpose. The same company also promotes the construction of the project CESUL called backbone of electric power transmission Tete-Maputo, valued at one billion and 800 million U.S. dollars. The Mozambican authorities say the southern African region has an energy decit of 4,840 megawatts and therefore the construction of Mpanda Nkuwa will minimize the decit. However, the fth anniversary of the reversal of the Cahora Bassa hydroelectric dam to the Mozambican state this week was marked with pomp and circumstance in state ceremonies which were attended by President Armando Guebuza. HCB managers say the dam last year recorded the highest revenue since its construction, and the process of payment to Portugal will end before the allotted time of 10 years.
THE Mozambican government and the New Partnership for Africas Development, NEPAD, are mobilizing 1841 million PUB.
for the construction of Mpanda Nkuwa on the Zambezi River. The new dam will be built in the central
The Energy Mozambique Media Project would like to wish to all its readers, customers and partners a
News
ECONOMY:
and use of trucks and other machinoth ery used in the research. Answering A to questions from members, Vaquina ber said major sai projects have pro to s spend more to contribute to state revenues and reafrmed that changing scal conditions agreed with the megaprojects already running cannot be made in haste. First of all we have to check the legal framework for changes to be made and assess the possible impacts of such measures on the international image of Mozambique as well as the efforts that the government has been carrying out for the creation of more and more jobs Vaquina added.
Mozambique: Anadarko Considering Joint Venture for Rovuma basin gas exploration
The U.S. group Anadarko Petroleum is examining the possibility of a partnership with a third party to share the development costs of massive discoveries of natural gas off the coast of Mozambique, said Anadarko Vice President John Colglazier.
help us out ... and probably minimize portfolio risk. Large natural-gas discoveries off the coasts of Mozambique, Tanzania and Kenya East Africa have transformed into one of the worlds most promising energy provinces and Attracted attention from oil and gas companies want to buy That Their way into the discovery. Earlier this year, Shell (RDSA) tried to access gas by Mozambique Attempting to acquire Cove Energy PLC, Which had a stake in the gas eld offshore Mozambique, but was outbid by Thailands PTT Exploration and Production PCL (PTTEP.TH). Mr. Colglazier said there are an estimated 35 trillion to 65 trillion cubic feet of recoverable natural gas in the offshore elds of Mozambique, and there is more potential for discovery. The company anticipates it will
begin selling gas from the area in 2018. Anadarko, the operator of Area 1 of the Rovuma Basin, has as partners in that block Mitsui of Japan (20%), BPRL Ventures and Videocon (both of India with 10% each), the state-owned Thai PTTEP (8.5 %) and the National Hydrocarbons Company (ENH) with 15%.
Technical Sheet
Production STATUS-Consultores de Comunicao, Lda. Address: Av. 25 de Setembro, nr 1123 Prdio Cardoso Telephone.: +258 21 32 71 16/ 17 Fax: +258 21 32 71 17 Director: Inguila Sevene Editor: Aunorio Simbine Collaborators: Nelson Charifo and Alexandre Dunduro Design: Lus Filipe Tembe English Language Reviser: Paulo Pinto Email: status@status.co.mz Website: www.status.co.mz e www. energiamocambique.co.mz
ANADARKOS vice president for investor relations, John Colglazier, Told analysts that the joint venture would help the company share the costs of developing its massive gas discovery off the coast of Mozambique. Its a pretty signicant piece of the portfolio is something thats not producing, Mr. Colglazier said. Weve said wed consider monetizing up to a third of our interest to
interview
PETROMOC
A company with eyes on the future: Interview with Dr. Zacarias Cossa, Petromoc financial manager
Maputo hosted between 3 and 6 of December the Oil and Gas Mozambique Conference 2012, once again organized by our South African partner IQPC; the event was attended by various sector players among multinationals, service providers companies, industry experts and potential investors, including the Ministry of Energy, Namburete, and Esperana Bias, the Minister of Mineral Resources, who discussed and collected data regarding the regulatory environment, granting of exploration licenses, business opportunities, among other aspects. Petromoc was represented at this important event by Dr. Zacarias Cossa, the company nancial manager, who spoke to Energy and Extractive Industry Mozambique magazine in an exclusive interview, here transcribed:
viders companies. Energy and Extractive Industry Mozambique: What was the focus of Petromoc presentation at the Oil and Gas Mozambique conference? ZC: My assessment focused on what Petromoc has got to offer through its infrastructure and logistics where we show what we have at the present and what we long to have soon. Because we are working exactly for that, for
the consolidation of Petromoc leadership within the infrastructure, but also in terms of distribution in the domestic and regional levels, that was the main focus. Energy and Extractive Industry Mozambique: And what are Petromoc projects for the future in the short term given the expansion and great natural gas discoveries made in the country? ZC: We aim to proceed with investments in the North, in Palma and Pemba. Petromoc is already working on feasibility studies for the construction of fuel terminals in Palma; there will be a root infrastructure in Pemba, which will be an increase to the current capacity. But we want to be there also to anticipate what will be the big moves in the evolution and commerCont. pag. 8
Energy and Extractive Industry Mozambique: What was your appreciation about the Oil and Gas Mozambique Conference 2012? Zacarias Cossa: It was positive as we could witness a vibrant participation of various stakeholders; the topics presented about the new gas discoveries in Mozambique create a new dynamic, a way to see Mozambique more friendly and different, especially the interest of various operators and multinationals as well as services pro-
interview
start selling fuel through Zimbabwe own network. Energy and Extractive Industry Mozambique: Beyond Zimbabwe, is Petromoc planning to expand to other countries in the region? ZC: Obviously, as shown on the map, is not only Zimbabwe. Petromoc plans to consolidate its presence in other countries such as Malawi, Botswana and Zambia, where we believe we have competitive advantages arising from our strong infrastructure assets. Energy and Extractive Industry Mozambique: In context of renewable energies, the so called clean energies, what Petromoc has done over this period? ZC: Petromoc has partnerships with foreign and national operators in the promotion of biofuels and we have a unit that was already installed two years ago and that has produced some biofuels, including biodiesel, that to difculty in accessing raw materials is currently stopped. However, there is some optimism in its recovery as we are in the process of acquiring a production unit of copra in Inhambane that will allow us to resume the production of biodiesel. And right now, the factory has installed production capacity of 80,000 liters per day.
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cialization of natural gas that rstly will be liqueed in the province of Cabo Delgado and then exported. We want to be part of the chain of companies that will provide services to multinational companies such as Anadarko and Eni. Energy and Extractive Industry Mozambique: During your presentation
you focused on the construction of a substation for fuel supply in Harare... could you develop this point further? ZC: About Harare, we spoke essentially about the construction of fuel stations that Petromoc recently acquired in number of 15 in the scope of the expansion of our business in the region. We are currently nalizing the legal aspects so that in the rst three months of the next year we can
INFRASTRUCTURES/LOGISTICS:
Mozambiques Port of Maputo expected to get investments estimated at USD750 million by 2030
The port of Maputo is expected to receive investments estimated at US$750 million by 2030, which will be channeled into different programs including expansion of the coal and container terminals, said the managing director of the Maputo Port Development Company (MPDC), Osorio Lucas.
ACCORDING to the MPDC managing director, the changes at the port are due to the need to improve the facility in order for it to compete with other ports in the region, particularly the South African port of Durban. MPDC is a private company born of a partnership set up in 2003 by state company Portos e Caminhos de Ferro de Moambique, South African logistics group Grindrod and Dubai-based ports group DP World.
Curiosity
Curiosity
SOCIAL RISKS
The Social Risk is related to social vulnerability shaped by environment and context. The main concept is that a person is in social vulnerability when showing signs of malnutrition, poor housing conditions and sanitation, prostitution, crime, child abuse, lack of close family ties, jobless statute - these factors make up the social risk. It may be the case for communities affected by mega projects operations.
POLITICAL RISKS
It refers to the possibility that the government of a certain country, exercising its sovereign power, take actions adverse to investments. Changes in regulation and taxation are the most common and ordinal ways in which local governments affect foreign business in the country. But the concept also includes more sporadic and signicant risks of expropriation or nationalization of assets, defaults on contracts to supply products or services, public disorder by government ineptitude and even coup, terrorism or even civil war.
ENVIRONMENTAL RISKS S
According to Paul Serra, environmental risks refer to the possibility that human health or the natural environment balance suffers damage as a result of the presence of environmental hazards. These risks can be caused by man or derived from natural causes. Environmental risks are linked, thus, directly, to environmental health, understood as the aspect of public health which is concerned with all factors, circumstances and conditions in the environment or humans vicinities which may have an inuence on their health and well-being. It is the case of areas near the mining exploration zones in different parts of the country.