Tom Bowker Maputo
A LAW adopted by Mozambique this week to provide long-term fiscal and legal stability for gas projects off its northern coast would be a benchmark for such agreements in other countries, the International Monetary Fund (IMF) said yesterday.
The law applies to two projects in the Rovuma Basin, near the border with Tanzania, operated by Anadarko Petroleum and Eni. It sets terms covering 30 years, while allowing for the tax the firms pay on gas production to be increased after 10 years and 20 years.
Should Anadarko, Eni or the government disagree on whether any terms have been violated, an independent expert appointed by the International Chamber of Commerce will adjudicate the dispute before any compensation is paid.
This provision would “probably establish a new benchmark”, Alex Segura-Ubiergo, the IMF’s resident Mozambique representative, said.
Eni, based in Rome, and Texas-based Anadarko are considering whether to develop offshore fields that are estimated by Mozambique’s national oil company to hold 250 trillion cubic feet of gas. That is enough to meet world consumption for more than two years.
The country may become the world’s largest exporter of liquefied natural gas after Qatar and Australia.
Mozambique’s Rovuma law allows Eni and Anadarko to set up special-purpose companies abroad for financing purposes and to have revenue paid into overseas bank accounts monitored by the Bank of Mozambique. That was “in line with best international practice”, Segura-Ubiergo said.
The new law was a “significant positive step” for its project, Anadarko said. The company said it appreciated “the government’s diligence and co-operation in getting us to this point”. – Bloomberg