9thAfricanMabote

1. OPPORTUNITIES AND CLIMATE FOR INVESTMENT IN MOZAMBIQUE

Arsénio Mabote Chairman, INP INP_ Instituto Nacional de Petróleos NOT AN OFFICIAL UNCTAD RECORD

2. BACKGROUND

Location: South-eastern Africa Land area: approximately 800,000 Km2 Coastline: Approximately 2,700 Km Onshore sedimentary area: 290,122 Km2 Offshore sedimentary area: 282,227 Km2 Population – 19.4 Million (estimated 2002) Capital – Maputo Over 60 Rivers & Lakes Official Language: Portuguese INP_ Instituto Nacional de Petróleos MAPUTO MOZAMBIQUE

3. EXPLORATION OPPORTUNITIES

INP_ Instituto Nacional de Petróleos

4. MOZAMBIQUE BASIN Petronas & ENH Sasol & ENH DNO & Wilrusco BANG & CLOVIS E&P

Two main basins: ROVUMA BASIN NORSK HYDRO INP_ Instituto Nacional de Petróleos

5. MOZAMBIQUE BASIN

INP_ Instituto Nacional de Petróleos

6. MOZAMBIQUE BASIN

Background INP_ Instituto Nacional de Petróleos 200m 2000m Onshore Area Offshore Area The Mozambique Basin occupies coastal plain and continental shelf: Covers about 500,000 km2: 275,000 km2 onshore 225,000 km2 offshore out to the 2,000 m isobath. Exploration History: Earlier 1907 to 1909 with drilling of shallow wells (<100 m) in the vicinity of reported oil seeps! First discovery in 1962 (Pande) Second discovery 1962 (Buzi) Third discovery 1967 (Temane) Forth discovery 2003 (Inhassoro)

7. OPEN ACREAGES: 25 blocks (offshore) Onshore area Buzi Block with gas discovery

8. Seismic coverage 15,453 km onshore 59,530 km offshore Wells A total of 97 wells: 82 wells onshore Only 15 wells offshore

INP_ Instituto Nacional de Petróleos DATABASE

9. MOZAMBIQUE BASIN

XAI-XAI GRABEN Potential plays: INP_ Instituto Nacional de Petróleos Stratigraphic traps in “Intra-volcanic” reservoirs Drape over volcanic plateau Rift “shoulder” traps Fault-block traps 1 2 3 4

10. MOZAMBIQUE BASIN

Zambezi Delta INP_ Instituto Nacional de Petróleos Gas shows and Dead Oil

11. ROVUMA BASIN

INP_ Instituto Nacional de Petróleos

12. BACKGROUND

Deposition systems: East African passive margin basin system Total Area about 73,000 km2: 15,000 km2 onshore 58,000 km2 offshore ROVUMA BASIN Exploration History: 1983-1987 – ESSO/SHELL joint concession 1986 – Esso/Shell drilled Mocimboa-1 well 1994-1995 – NL (Mopet) onshore/offshore concession of about 38,000 sq km. 1995-2001 – LONROPET onshore/offshore concession (30,000 sq km): In 1998 Energy Africa farmed in for a 30% interest

13. OFFSHORE AREAS 1, 3, 4 & 6 ONSHORE AREA

ROVUMA BASIN INP_ Instituto Nacional de Petróleos Open Acreages High level of interest from oil Companies; Perceived all G&G conditions for oil generation; Good data on source rock, maturation and reservoir conditions; Attractive deep water potential.

15. INVESTMENT CLIMATE

INP_ Instituto Nacional de Petróleos

16. PETROLEUM LEGISLATION FOR THOSE WHO WANT TO INVEST IN EXPLORATION IN MOZAMBIQUE PROVIDES FOR

Guarantees Legal protection of property, rights & other assets; Unrestricted import & repayment of loans and equity; Free repatriation of dividends (100%); Compensation in case of expropriation (only in case of security/health reasons); Good Fiscal Terms;

17. LEGISLATION ON INVESTMENT

Code of Fiscal Benefits Customs duties exemptions Reduction of corporate tax Reduction of supplementary tax

18. FRAMEWORK CONDITIONS

INP_ Instituto Nacional de Petróleos

19. FRAMEWORK CONDITIONS

The new regulatory framework evolving previous framework system creating the basis for regulatory consistency, transparency and predictability in Mozambican petroleum policy implementation New framework form the basis for clarification of resource management responsibilities and State interests in the upstream petroleum sector The law, regulation and model documents: Implement a more consistent legal hierarchical structure

20. FRAMEWORK CONDITIONS

Core Elements of new regulatory structure: Petroleum Law 3/2001 Petroleum Regulations 2004 New Model Exploration and Production Concession Contract Legend Administrative law Contract law

21. FRAMEWORK CONDITIONS

System approach moving from traditional contract based system to a modernized EPCC system regulating relationship between State and commercial entities: Risk Service Contract Production Sharing Contract Exploration Production Concession Contract Concession/ Licensing Contract Law Admin Law Increased reliance in new EPCC based system on legislation rather than contract clauses Contract

22. ORGANISATIONAL STRUCTURE - OLD

Petroleum law the legal foundation for the governance structure of petroleum activities clarifying roles and interests:

23. ORGANISATIONAL STRUCTURE - NEW

Petroleum law the legal foundation for the governance structure of petroleum activities clarifying roles and interests: Regulator Commercial Interest Resource owner

24. CONCLUSION REMARKS

Mozambique offers good exploration opportunities: Available and prospective acreage Favourable legal, regulatory and fiscal framework Adequate infraestructure for natural gas transmission; Political stability