Oil explorers to spend $900 million in Mozambique

MAPUTO and JOHANNESBURG (Bloomberg) -- Companies exploring for oil and gas in Mozambique will spend at least $900 million, boosting the nation’s hopes of becoming a major exporter, Mineral Resources Minister Max Tonela said.

Empresa Nacional de Hidrocarbonetos, the state-owned oil company, will have stakes of 15% to 30% in the projects, Tonela said Monday at a ceremony where the hydrocarbons regulator signed an exploration agreement for oil and gas with Exxon Mobil. The government had previously put the total exploration spend at $711 million.

The offshore concessions are part of the southeast African nation’s fifth licensing round, which Exxon and its partner Rosneft Oil won in 2015. The companies will spend “hundreds of millions” of dollars in exploration, Jos Evens, Exxon’s country head, told reporters in the capital, Maputo, after signing the contracts. The company is analyzing seismic data and will start a “drilling campaign in the coming few years,” he said.

Mozambique is thought to have enough gas to become the world’s fourth-largest exporter of the fuel. The country hopes companies will start producing from 2022, providing much-needed revenue for a government that has been in default on its commercial external debt since announcing it wanted to restructure in 2016.

The national oil and gas regulator said in 2015 Exxon and its partners would spend $527 million drilling five wells in the three blocks.

The country will probably sign agreements with Sasol and Eni of Italy later this month, Tonela said.

Exxon is already developing a floating liquefied natural-gas project together with Eni and plans to reach a final investment decision on the much larger Rovuma LNG project by the middle of next year, Evens said.

Anadarko Petroleum, based in Woodlands, Texas, also plans to make a final decision on its Mozambique gas project next year, which will be similar in size to Exxon’s.