MOZAMBIQUERESOURCESPOSTTHE

Eni and KOGAS signed cooperation agreement

A Report on the 5th National Licensing Round

Chirodzi mine eyes 10 million tones of coal by 2015

Introducing the CEO of Eni SA

Vale reports increased production in Moatize

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Mozambique Legislation Environment

ENH engages on Rovuma hy-drocarbons com-mercialization projects

Mozambique in the 6th world tantalum producing countries

According to the new legislation, which will come into force at the end of the year, foreign companies interested in oil and natural gas prospecting licenses will have to partner the Mozambican state com-pany and 25 percent of all the gas they produce will be sold on the domestic market.

Mozambique appears in the 6th world tantalum producing countries ac-

cording to data provided by the US Geological Survey. The Mozambique

Resources Post took a look at survey and brought to you the full list of

these countries, along with a little background information on each na-

tion.

Mozambique has been very active in lining up possible projects aimed at commercializing the natural gas discovered off its coast. The coun-try and the companies involved in exploration offshore – ENI and Ana-darko Petroleum – already have an LNG export scheme in the works but other options such as GTL are being considered as reported by Africa Pe-troleum Magazine.

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September 2014The Post

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Mozambique Oil & Gas Industry

The National Petroleum Insti-tute (INP Portuguese version) has formally announced the launch of its 5th Mozam-bique Licensing Round at the Hilton Hotel, London on 23 October 2014. The round is scheduled to close on 20 January 2015.

A total of 15 blocks will be of-fered for competitive bidding in the Rovuma, Zambezi and Angoche areas offshore and the Pande Temane and Palmei-ra areas onshore. The blocks cover a combined area of ap-proximately 76,800 square kilometres. Each block has a maximum exploration period of eight years to be subdivided into three phases, as well as a development and production period of 30 years.

Three blocks are on offer in the Rovuma offshore area, close to

A Report on the 5th National Licensing Round

Area 1 and Area 4 where Ana-darko and Eni have confirmed resources of approximately 70 tcf and 85 tcf respectively. An LNG development is planned to monetise the gas. In the An-goche area, located within the southernmost extent of the offshore Rovuma basin, two unexplored frontier blocks are on offer. Mozambique’s na-tional oil company, Empresa Nacional de Hidrocarbonetos - ENH, estimates resources of 180 tcf for the Rovuma Basin to date.

Six blocks are on offer in the offshore Zambezi Delta area, where less than a dozen shal-low water wells have been drilled, some of which encoun-tered gas shows. There have been no wells drilled in the deeper areas covered by the blocks.

There are also three blocks on offer in the area surround-ing the Pande Temane fields, operated by Sasol. The Pande Temane fields have P50 re-coverable reserves of approxi-mately 3,370 bcf combined and have produced at over 300mmcf/d. Plans are in place to increase production from Pande Temane to 450mmcf/d via a USD 1.2bn expansion project. In 2003, Sasol also dis-covered the Inhassoro field, in

the Pande Temane permit, with a commercial oil rim – the first light oil discovery in Mozam-bique, which produced over 236,000bbl during an extend-ed well test in early 2013.

One other block is available in the Palmeira area near Mozam-bique’s capital, Maputo. His-torically, two dry wells werte drilled in the region during the 1970’s.

Eni signed last month a cooperation agreement with Ko-rea Gas Corporation (KOGAS) to further strengthen their relationship in a number of areas, particularly in the up-stream and LNG sectors. The agreement will allow the companies to jointly pursue opportunities worldwide.

Eni and KOGAS expect the cooperation agreement to facili-tate the LNG development of Area 4 in Mozambique where Eni is operator with a 50% indirect interest, KOGAS, Galp En-ergia and ENH partners in the agreement with 10% interest each and CNPC with 20% indirect participation.

KOGAS has also been working in partnership with Empresa Nacional de Hidrocarbonetos - ENH, the Mozambique Na-tional Hydrocarbon Company in the establishment of gas network in Maputo.

Eni and KOGAS signed cooperation agreement on upstream and LNG activities

Areas for hydrocarbons research and production - source: INP

September 2014The Post

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According to the new legisla-tion, which will come into force at the end of the year, foreign companies interested in oil and natural gas prospecting licens-es will have to partner the Mo-zambican state company and 25 percent of all the gas they produce will be sold on the do-mestic market.

The approval of the Oil Law allows the Mozambican Gov-ernment to issue new pros-pecting licenses to companies that will have to partner state oil and gas company Empresa Nacional de Hidrocarbonetos - ENH, said the country Mineral Resources Minister Esperança Bias.

The proposed revision of Law no. 03/2001 of 21 February, submitted to the National As-sembly after approval by the Council of Ministers, specifies that the Government ensures that ENH, the state’s repre-sentatives in oil and gas nego-tiations, plays a decisive role in promoting and commercializ-ing those products.

The daily Notícias reported that the new Oil Law signifi-cantly modifies the document approved in 2001, taking into account the country’s current social, economic and political situation.

The document states that “oil

operations are practiced via a concession contract resulting from public tender, simultane-ous negotiation or direct nego-tiation,” and that “the granting of rights to carry out petroleum operations must always respect national interests vis-à-vis de-fense, navigation, research and preservation of marine resources, existing economic activities and the environment in general.”

Minister Esperança Bias said during the proposed revision’s presentation that one of the Government’s challenges re-garding oil and gas exploita-tion is to grant a percentage of generated revenue to the state to benefit communities in project areas, with title-holders urged to acquire local goods and/or services.

Under the terms of the re-viewed law subsidiaries set up in Mozambique by foreign companies interested in pros-pecting for oil and gas in the country will have to request a listing on the Mozambican Stock Exchange.

Meanwhile, Arsénio Mabote, chairman of the National Oil Institute, said there were many companies interested in oil and gas prospecting in the sea of Mozambique, but provided no details about these companies.

Above all the new Oil Law seeks to address the need to monitor the development of the legal and fiscal regimes happening globally and follow the prin-ciples of economic and social policy, namely to protect the national interest, promoting lo-cal development, environmen-tal protection and rational use of oil resources.

Thus it presents many new sub-jects that tend to strengthen the state’s role in the field of hy-drocarbons, for example with the establishment of the man-datory exploration companies publicly present their income, the amounts paid to the State as well as the charges for social and corporate responsibility subject to inspection.

It determines, on the other hand, that the state should control the prospecting, explo-ration, production, transporta-

tion, marketing, refining and processing of liquid and gase-ous hydrocarbons and their de-rivatives.

“The Government must en-sure that a share not less than 25 percent of oil and gas pro-duced in the country, is dedi-cated to the national market.”

It also states that investors in-terested in the exploitation of oil resources in Mozambique should enter into partnership with Empresa Nacional de Hi-drocarbonentos - ENH, as a rep-resentative of the Mozambican state.

Regarding environmental is-sues, the Law states that in-vestors will be liable for any environmental damage or en-danger public health, resulting from that activity.

Mozambique Legislation Environment

The changes brought by the recently approved new oil law

Esperança Bias, Mozambique Minister of Mineral Resource

September 2014The Post

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Mozambique has been very active in lining up possible projects aimed at commercial-izing the natural gas discov-ered off its coast. The country and the companies involved in exploration offshore – ENI and Anadarko Petroleum – already have an LNG export scheme in the works but other options such as GTL are being consid-ered as reported by Africa Pe-troleum Magazine.

The Magazine adds that to-ward this goal Mozambique has signed two agreements that could lead to a GTL facil-ity for the country. The first agreement is between Shell and Mozambique’s ENH. The two signed a memorandum of understanding (MoU) that has the duo undertaking a viability study to identify the potential for a GTL plant which will form the basis for the development

of other areas, including the supply of associated gas and infrastructures, as well as joint negotiations to acquire hydro-carbon exploration rights.

Since 2010, there have been a series of natural gas discov-eries in the offshore Rovuma Basin that are large enough to support liquefied natural gas (LNG) projects, with the United States-based Anadarko and ENI have led exploration activities in the area, said Energy Infor-mation Administration (EIA), the statistical arm of US Energy Department.

The signing of the MoU be-tween Shell and ENH was pre-ceded by the signing of an agreement for a joint study to identify areas of high hydrocar-bon potential in Mozambique. In the future the two compa-nies may acquire joint rights in

the areas concerned.

Speaking immediately after signing the memorandum, ENH Chairman Nelson Ocuane said the agreement was part of ENH’s efforts to become a prominent and integrated hy-drocarbon company, operating in Mozambique and in other countries.

Shell Executive VP for Down-stream Development Edward Daniels said he hoped that Shell would work together with ENH to study opportuni-ties for further development and diversification of the gas industry in Mozambique. “Shell brings experience of more than 50 years in developing gas pro-jects using our global reach, our financial solidity and our advanced technological capac-ities,” he said.

Nevertheless, Shell is not the only company interested in es-tablishing a GTL facility in Mo-zambique. Another agreement was signed between ENH, Sasol Ltd and ENI. The three firms agreed to conduct a joint pre-feasibility study for a large- scale GTL plant. The study will assess the viability and benefits of such a plant to the region.

ENH and ENI are partners in the Area 4 block of the Rovuma ba-sin and Sasol is developing the Pande and Temane natural gas project with ENH. Sasol has the technology to transform natu-ral gas into liquid derivatives.

“Setting up a project of this kind will allow the country to produce liquid fuel from gas, such as lighting oil, for exam-ple, and reduce dependence on imports,” Nelson Ocuane said.

ENH engages on Rovuma hydrocarbons commercialization projects

Mozambique Oil & Gas Industry

Nelson Ocuane, ENH CEO

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Mozambique appears in the 6th world tantalum producing countries according to data provided by the US Geological Survey. The Mozambique Resources Post took a look at survey and brought to you the full list of these countries, along with a little background information on each nation.

1. Rwanda Mine production: 150 MT Rwanda’s 2013 tantalum pro-duction came to 150 MT, the same amount it put out in 2012. The African country has a reputation for being a top pro-ducer of the metal — in 2011, it accounted for 15 percent of world tantalum mine produc-tion, according to another USGS report. Bloomberg reported last month that Rwanda has re-cently been promoting the fact that its tantalum is conflict free. That’s largely because companies registered with the US Securities and Exchange Commission (SEC) have been preparing to disclose whether they are receiving tantalum, tungsten, tin and gold from

the DRC, its neighbor.

2. Brazil Mine pro-duction:

140 MT In the past, Tan-

talum Investing News has described

Brazil as “the silent king of tantalum.” The moniker

comes from the fact that de-spite being the world’s second-largest tantalum producer, the nation generally remains out-side the media spotlight and away from “issues surrounding conflict minerals or mine clos-ings and reopenings.” Brazil is also one of only two countries whose tantalum re-serves are listed by the USGS. They sit at 36,000 MT, behind Australia at 62,000 MT.

3. Democratic Republic of the Congo Mine production: 110 MT Mention the DRC and for many what come to mind are conflict minerals. As mentioned, the US is trying to change that per-ception by forcing companies to disclose whether they’re receiving tantalum and other metals from that country. While that’s a good idea in

theory, skepticism is rife about whether disclosure will end up being useful. Most recently, concerns have been voiced about the fact that companies don’t have to reveal which of their products is not conflict free. Tom Quaadman, vice president of the US Chamber of Commerce, is quoted as saying in a Wall Street Journal article, “[w] hen I did math in school I had to do the work and show the answer. What has hap-pened now is companies have to show their work and not their answer.”

4. Nigeria Mine production: 60 MT Nigeria has produced tantalum for decades, and though the USGS doesn’t list its reserves of the metal, they are believed to be substantial. Interestingly, however, it’s artisanal miners that give them the most atten-tion. A recent editorial in Nigerian publication Punch reveals that it’s not just tantalum that’s neglected in the country — in fact, mining contributes only 0.3 percent of its GDP. “We need to amend the 1999 Constitution to allow states to control their own minerals and reduce the destructive depend-

ence on oil,” the publication states.

5. Canada Mine production: 50 MT Canada is not a tantalum pow-erhouse like Rwanda and Brazil are, but that could change within the next few years, Chris Grove, director of Commerce Resources, said quoted by the Tantalum Investing News last year. He explained that all of the deposits in Brazil, a top tanta-lum producer, are carbonatites. There is also high carbonatite activity in British Columbia and Quebec, and it potentially represents hundreds of years of supply.

6. Mozambique Mine production: 40 MT Mozambique’s Alto Ligonha pegmatite belt hostes his-toric tantalum mines. One of them, Marropino, was recently closed, according to all Africa news. Another, called Muiane, is owned by Pacific Wildcat Resources. The company notes on its website that it is “cur-rently working on a potential financing option to allow the addition of a spiral circuit at Muiane to allow operations to recommence.”

Mozambique in the 6th world tantalum producing countries

Mining Industry

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Upcoming Industry Events

September 2014The Post

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Chirodzi mine eyes 10 million tones of coal by 2015Indian mining, steel and power conglomerate Jindal Steel & Power subsidiary Jindal Africa reports it is moving into Phase 2 of its Chirodzi coal mine project, in Moatize district, Tete province. Following the completion of this phase, the mine is expected to yield more than ten million tones of coal a year in 2015 and beyond as quoted by Mining weekly.

The mine which produces coking and thermal coal, has a proven reserve of 700-million tones and an expected life-of-mine of 25 years. Operations at Chirodzi mine started in 2012, which resulted in Jindal Africa producing three million tones that year.

The mine’s first shipment of 36 000 t of coal was exported during the first quarter of 2013, after which the mine was officially inaugurated in August 2013.

Jindal Africa’s expansion plans include an infrastructure

development strategy, as well as the construction and operation of Africa’s first coal slurry pipeline, to transport product from the mine to the Port of Beira over several hundred kilometers. Alternatively, the company will develop a rail line from Moatize

to the Port of Beira.

The prefeasibility studies for both options have been completed and the company will advance on one of these two alternatives, according to Jindal Africa CEO Ashish Kumar, who spoke at the launch of the company’s new head office in Johannesburg.

Beira port’s capacity is being upgraded to an estimated 20-million tones, while the Port of Nacala, in the Nampula province, will have a 40-million-tonne capacity by 2016. The new Macuzi port, projected to handle more than 30-million tones a year, is expected to be complete by 2025. “Currently, 1 200 personnel, mainly comprising local laborers, are working at Macuzi,” the Mining weekly wrote.

Exploration & Production

According to the Italian gi-ant oil company, Descalzi has been Chief Operating Officer of Eni - Exploration & Production Division since July 2008. He is currently Vice President of Con-findustria Energia. After joining

Eni in 1981 as Oil & Gas field petroleum engineering and project manager for the devel-opment of North Sea, Libya, Nigeria and Congo. In 1990 he was appointed Head of reser-voir and operating activities for

Italy, after several other posi-tions in the company.

Claudio Descalzi was the first European in the field of Oil&Gas to receive the prestig-ious “Charles F. Rand Memorial

Gold Medal 2012” award by the Society of Petroleum Engineers and the American Institute of Mining Engineers.

Introducing the CEO of Eni SA

Boards & Appointments

Born in Milan in 1955 and graduated in Physics in 1979 from the University of Milan, Claudio Descalzi has been named the new ENI SPA CEO since May this year, replacing Paolo Scaroni, the former company CEO. The new man total calculated compensation topped €2,282,000 as of 2013 fiscal year, according to Bloomberg Businessweek.

Jindal Chirodzi Coal Mine, Tete province - Mozambique, source: Jindal Africa

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The Mozambique Resources Post, your national source of oil & gas, mining and energy news, focuses on ma-jor players in the traditional resources industry that operates in Mozambique featuring profiles on leading companies, columns by industry experts and news and notes about the latest trends in these markets. It targets your audience as your strategy dictate and reaches the specific segment of the industry you are looking for.

The Mozambique Resources Post is the must-read bi-weekly publication for the leaders within these emer-gent and dynamic sectors. As a proudly Mozambican media channel you know your partners are seeing your

message. Through our digital publication, online website and independent editorial, The Post helps executives at the senior boardroom, Government and field levels staff stay abreast of the most important operational issues in this industry.

For more info, please contact at: Feedback, lda Av. 25 de Setembro, 1147, 2nd Floor Maputo – Mozambique Telephone: (+258) 21320735 thepost@feedback.co.mz

September 2014The Post

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Vale reports increased production in Moatize operations in 3Q

About Us

Brazilian mining major Vale’s Moatize coal operation in the Tete province increased its output during the third quarter (3Q) of this year, in comparison with the sec-ond quarter (2Q). This was revealed by Vale in its 3Q14 Production Report.

Regarding Moatize’s output,

828 000 t was metallurgical or coking coal, represent-ing a 16.1% increase over the 2Q14 number of 714 000 t and a 17.3% rise over the 3Q13 amount of 706 000 t. The mine’s total production of metallurgical coal during the first nine months of this year came to 2.137-million tons, 8.4% higher than the figure of

1.972-million tons for the same period last year.

Moatize’s thermal coal produc-tion during 3Q14 amounted to 468 000 t, a 2.4% increase over that for 2Q14, which came to 457 000 t. It was also 1.2% up on the 462 000 t produced during 3Q13. Total thermal coal production for the first

nine months of 2014 was 1.338-million tons, a 14.8% increase over the output of 1.166-million tons for the same period in 2013.

During the third quarter, Moatize produced a total of 1.296-million tons of coal, in comparison with 1.171-million tons in the second quarter.

Mozambique Mining Industry

Source: Vale.com