#1inp INSTITUTO NACIONAL DE PETROLO NATIONAL PETROLEUM INSTITUTE - MOZAMBIQUE Presentation to the AAPG 2011 Conference INP_Instituto Nacional de Petróleo Houston, Texas, April 10th-13th 2011#2in انال INSTITUTO NACIONAL DE PETRÓLEO TOPICS Introduction to Mozambique Legal Framework Petroleum Activities Database Current Exploration Activities & Perspectives Natural Gas Project Development Challenges Futures Plans Final Remarks INP Instituto Nacional de Petróleo#3inp INSTITUTO NACIONAL DE PETRÓLEO INTRODUCTION TO MOZAMBIQUE Location: South-eastern Africa ◆ Land area: approximately 800,000 Sq.km ◆ Coastline: Approximately 2,700 Km Onshore sedimentary area: 290,122 Sq.km Offshore sedimentary area: 282,227 Sq.km ♦ Population: 21.8 million (2009) ◆Capital: Maputo (3 million people) ◆ Natural Resources: Hydropower, natural gas, coal, minerals, raw wood, agriculture Export: natural gas, prawn, cashew, sugar, tea, coconut oil and cotton President: Armando Emilio Guebuza INP Official Law Portuguese Nacion#4in INSTITUTO NACIONAL DE PETRÓLEO inp MOZAMBICAN PETROLEUM INSTITUTIONS INSTITUTO NACIONAL DE PETROLEO Is the regulatory authority for the petroleum operations (exploration, production and transport of hydrocarbons). Mission To manage the petroleum resources of Mozambique and administer the related operations for the benefit of the Society, and in compliance with the existing laws, government polices and contractual commitments. Vision ◆ As the Regulatory Authority for petroleum exploration and production, ascertain that petroleum operations are conduced in accordance with laws, regulations and international best practices, with special emphasis on optimal resource management, health safety and the protection of environment INP Instituto Nacional de Petróleo#5in MOZAMBICAN PETROLEUM INSTITUTIONS при INSTITUTO NACIONAL DE PETRÓLEO ENH - National Hydrocarbon Corporation ENH Ho de Moçambique Is the state oil company established by the Law 3/81 ◆ Formerly with exclusivity rights, is now mainly commercially focused Participates as a stakeholder, in the natural gas project Participates in the exploration, with carried interest, in association with oil companies in exploration. Mission To develop into a competent petroleum company with a profitable portfolio of business activities ranging from Oil & Gas E&P, Gas Transmission, Distribution and Gas Utilization, mainly within Mozambique but also including neighboring countries if feasible Vision ◆ Optimize the value that can be generated for Mozambique through commercial participation in Exploration & Production as well as in the total Petroleum Value Chain ○ ENH has two affiliated companies (CMH & CMG) INP Instituto Nacional de Petróleo#6INSTITUTO NACIONAL DE PETRÓLEO SECTOR STRATEGY Exploration Strategy ✓ To maximise value creation from the petroleum resources in the country Licensing Policy ✓ Licensing through open bidding rounds ✓ Access to data / prepared data packages ✓ Sufficient time/resources for promotion ✓ Direct negotiations Main Requirements Technical expertise and financial capacity including competence and experience of applicant's former activities ( ex: Deep Water and HSE) INP Instituto Nacional de Petróleo#7inp INSTITUTO NACIONAL DE PETRÓLEO LEGAL FRAMEWORK INP_Instituto Nacional de Petróleo#8inp INSTITUTO NACIONAL DE PETRÓLEO LEGAL FRAMEWORK The Petroleum law is the legal foundation for the governance structure of petroleum activities, clarifying roles and interests: INSTITUTO NACIONAL DE PETROLEO MIREM Resource owner ENH DNO Наносаванна de Moçambique eni Statoil PETRONAS Sasol .. Anadarkp! Regulator Commercial Interest INP Instituto Nacional de Petróleo Petroleum Corporation#9inp INSTITUTO NACIONAL DE PETRÓLEO MOZAMBICAN REGULATORY SYSTEM Core Elements of the Legal and Regulatory structure New Model Exploration and Production Concession Contract (EPCC) - 2005. Petroleum Law 3/2001. EPCC Petroleum Regulations Petroleum Law Legend Administrative law Contract law INP Instituto Nacional de Petróleo Regulation for Petroleum Operation, Decree No.24/2004. Strategy for Concession Areas for the Petroleum Operations, Resolution No. 27/2009. Strategy of Development of Natural Gas Market in Mozambique, Resolution No. 64/2009 Regulation for licensing Petroleum installation and activities, Ministerial Diploma No. 27/2009. Environmental Regulation Specific for Petroleum Activity Fiscal Law on Petroleum activities: Law 12/2007. Mining and Petroleum Tax Incentives: Law 13/2007 Petroleum Production Tax Regulations, Decree No. 4/2008 http://www.inp.gov.mz#10in INSTITUTO NACIONAL DE ROLE FISCAL REGIME TAXATION % Income Corporate Tax 32 % VAT 17 % Royalty - Gas Royalty - Oil 6% 10% INP Instituto Nacional de Petróleo Laws 12 & 13/2007#11inp INSTITUTO NACIONAL DE PETRÓLEO TYPES OF CONCESSION CONTRACTS Reconnaissance Contract Exclusivity right 2 years to conduct survey studies and drill wells up to 100 meters Exploration and Production Concession Contract (EPCC) ◆ Exclusive right to conduct petroleum exploration and production as well as a non-exclusive right to construct and operate oil or gas pipeline systems ◆ The exclusive exploration rights shall not exceed 8 years, and shall be subject to provisions concerning abandonment. The exclusive right to develop and produce shall not exceed 30 years. Oil and Gas Pipeline Contract Grants the right to construct and operate an oil or gas pipeline for the purpose of transporting hydrocarbons INP Instituto Nacional de Petróleo#12inp INSTITUTO NACIONAL DE PETRÓLEO PETROLEUM ACTIVITIES INP_Instituto Nacional de Petróleo#13inp TUTO NACIONAL DE PETROLO MOZAMBIQUE SEDIMENTARY BASINS ZAMBIA ◆Mozambique Basin Lower Zambeze Graben ⭑Middle Zambeze Basin MIDDLE ZAMBEZI GRABEN ◆ Rovuma Basin ♦Maniamba Basin ◆ Lake Niassa Basin INP Instituto Nacional de Petróleo - ZIMBABWE R.S.A! SWAZILAND Limpopo River LAKE MA BASIN Onshore 17.000 Sq Km Offshore - 12.500 Sq Km BASIN Rovum Mocimboa River Beira Mamiamba ROVUMA BASIN Lurio River Pemba MOZAMBIQUE Mozambique LOWER ZAMBEZI GRABEN Pehane Quelimane Angoche CHANNEL Save River Mambone Onshore - 275.000 Sq Km Offshore - 225.000 Sq Km MOZAMBIQUE BASIN ° Inhambane Moamba Xai-Xave Maputo Ponta Zavora 200 000 3000 KEY TO BASINS Pre-break-up "Karoo' (Late Carboniferous-Triassic) Break-up related Jurassic volcanics Syn-break-up (Jurassic-Tertiary) Post-break-up (Mio-Pliocene) 0 100 kilometres 200 300 400 (bathymetric contours in metres)#14inp DE PETRÓLEO INSTITUTO NACIONAL DO MOZAMBIQUE LICENSING ROUNDS 2005 -1st Licensing Round (Mozambique Basin) प्रद Congo, DRC 2007 - 2nd Licensing Round (Rovuma Basin) 2008 - 3rd Licensing Round (Mozambique Basin) Bulawayo 2009 - 4th Licensing Round (Onshore Basin) - INP Instituto Nacional de Petróleo Zambia Marare Zimbabwe South Africa Mbabane Malawi Lilongwe Zamó bezi Bla Tanzania Mozambique Channel Moroni Madagascar Legend 4th Bidding Round - 2010 3rd Bidding Round - 2007 2nd Bidding Round -2005#15inp INSTITUTO NACIONAL DE PETROLE INP_Instituto Nacional de Petróleo DATABASE#16in INSTITUTO NACIONAL DE PETRÓLEO 2D/3D SEISMIC COVERAGE AND WELLS Total of 141 wells drilled (onshore/offshore): 81 wells - wildcat ◆ 24 wells production - ◆34 wells - appraisal 2 wells - Injection zombi Zambia Malawi Wlongwe Zambe Nampula Bantyre Muzane vp-Mozambique Zimbabwe Chimoic Total of Acquired Seismic ◆ Approximately 114.000 km of 2D seismic acquired from 1950's to 2010 (onshore/offshore) Approximately 15.000 Sq. km of 3D seismic (offshore). South Africa INP Instituto Nacional de Petróleo Moabane Awaelland#17ON/OFFSHORE GRAVITY & MAGNETIC DATA in INSTITUTO NACIONAL DE PETRÓLEO Inhaminga Onshore Zambezi. Area Area E Area D Area H Area G Buzie Area I onstic Combezi Area F Sofala M-10 Zambezi Offshore Area B Pande Block 19 Area E Area D Area A Bleck-16 Area C Temane Area C Gravity Data Gravity profiles Magnetic coverage INP Instituto Nacional de Petróleo -2000 200 Area H Area G#18in INSTITUTO NACIONAL DE PETRÓLEO DISCOVERIES Mozambique Basin ✓ 1961 - 1st Discovery - Pande ✓ 1962 - 2nd Discovery - Buzi ✓ 1967 - 3rd Discovery - Temane ✓ 2003 - 4th Discovery – Temane East 5th Discovery - Inhassoro 2008 - 6th Discovery - Block 16&19 Rovuma Basin 2009 One Gas shows Onshore Area 2010 One Oil Shows - Ironclad well 2010 1st Discovery in February - Windjammer - 2nd Discovery in October - Barquintine 3rd Discovery in November – Lagosta 2011 - 4th Discovery in December-Tubarão INP_Instituto Nacional de Petróleo Mbabang MYTIES Morons#19inp INSTITUTO NACIONAL DE PETRÓLEO NATURAL GAS RESERVES Mozambique Basin - Pande & Temane fields Proved Reserves Natural Gas Discovery Fields Operator Resources GIIP (TCF) Gas (TCF) Condensate (106 Barrels) Pande 1961 -Gulf SASOL 3.407 1.86 6.0 Beginning / Duration 2007/25 Years Temane 1967 - Gulf SASOL 1.377 0.83 8.0 2004 / 25 Years Grand Total 4.784 2.74 14.0 Additional potential of about 1.8 TCF is present at the Pande/Temane PSA Area Rovuma Basin - Discovered Resources under evaluation INP Instituto Nacional de Petróleo#20inp TUTO NAGOVA DE PETRÓLEO CURRENT EXPLORATION ACTIVITIES AND PERSPETIVES INP_Instituto Nacional de Petróleo#21inp انال INSTITUTO NACIONAL DE PETRÓLEO CONCESSIONS AREAS MOZAMBIQUE BASIN (8) Concession Partners Pande/Temane (PSA) Sasol (100%) Pande/Temane (PPA) Sasol (70%), ENH (25%) & IFC (5%) 16 & 19 Inhaminga Baia de Sofala M-10 Area-A Búzi Sasol (50%), Petronas (35%) & ENH (15%) DNO (55%), Harmattan (5%), New Age (40%) Sasol (85%) & ENH (15%) Sasol (42.5%), Petronas (42.50%) & ENH (15%) Sasol (85%), ENH (15%) PT Kalila (70%) & ENH (30%) INP Instituto Nacional de Petróleo Chilmots 205 Buzi PT Kalila Inhaminga DNO Sofala Sasol Pande/Temane Sasol M-10 Sasol Block 16/19 Pande/Temane Sasol Sasol Pande/Temane Sasol Area A Sasol Pande/Temane Sasol W N#22INSTITUTO NACIONAL DE PETRÓLEO CONCESSIONS AREAS ROVUMA BASIN (5) Concession Area Onshore Area 1 Area 4 Area 2 & 5 Partners Anadarko (35.7%), Artumas (15.3%) Maurel & Pron (24%), ENH (15%) & Cove Energy (10%) Anadarko (36.5%), Mitsui (20%), ENH (15%), BPRL (10%), Videocon (10%) & Cove Energy (8.5%) ENI (70%), ENH (10%), KOGAS (10%) & Galp Energia (10%) Mtware AREA Onshore Anadarko Statoil (90%) & ENH (10%) Area 3 & 6 Petronas (90%) & ENH (10%) 200 Km Bale de Meispe AREA 1 Anadarko AREA 4 ENI AREA 2/5 StatoilHydro AREA 3/6 Petronas Fameo Velos INP Instituto Nacional de Petróleo N E#23inp MOZAMBIQUE BASIN Pande & Temane – Sasol - Acquired and interpreted 933km of 2D seismic in 2009. Drilled during 2003/8 13 Exploration Wells - 17 Production Wells 14 Appraisal Wells Drilled during 2010: 17 Production Wells 2 Exploration Wells Work over in 6 Production Wells 2010/11 Inhaminga Block 3 wells drilled (2005 - 2007) A Total of 760km of 2D seismic (2007-2009), 1 Exploration Wells drilled in 2010 1 Exploration well drilled in 2011 Buzi Block - PT Kalila (Buzi Hdroarbons) Finished EIA to seismic acquisition and to drill 1 Exploration Well Completed reinterpretation of previously existing 1650 km 2D seismic 16&19 Block- Sasol Acquired 2 040 Km² of 3D seismic Acquired 2 031 Km of 2D seismic Two Exploration Wells drilled in 2008 and both were gas discoveries EIA to drill 2 exploration wells INP Instituto Nacional de Petróleo 1 Sofala Bay & M-10 Blocks - Sasol Re-processed & interpreted 2729 km of 2D seismic for prospect maturation Finished EIA to drill Exploration Wells#24TUTO NACIONAL D ROVUMA BASIN CURRENT ACTIVITIES Area Onshore - Anadarko ◆ Acquired 648 Km of 2D seismic Drilled 1 Exploration Well in 2009 (Mecupa -1) Area 2&5 Statoil - Acquired 3000 Km of 2D seismic Acquired 1407 Sq Km of 3D seismic and it is being processed ◆ Completed Ocean studies for tide currents. Area-1 - Anadarko Acquired 6000km of 2D seismic & 3400 SqKm of 3D seismic data Drilled 6 Exploration 2009-2010 with 4 gas discoveries and 1 technical oil discovery Ongoing appraisal activities Area 3&6 Acquired 7287 km of 2D seismic Area 4 INP Instituto Nacional de Petróleo Acquired 1047 Km of 2D seismic ◆ Acquired 1520 Sq km of 3D seismic and it is being processed and interpreted 2 well to be drilled in 2011#25inp INSTITUTO NACIONAL DE PETRÓLEO Exploration Oportunities INP_Instituto Nacional de Petróleo#26inp INSTITUTO NACIONAL DE PETRÓLEO C West 0.0 C' METANGULA HALF GRABEN East -0.0 1.0- MTANGA 2.0 PLATFORM 3.0- Nkhotakota Liwaladizi SANI F.Z. F.Z. HIGH 4.0- 5.0 • Lake Niassa Basin Banhine 36058 Sq Km Palmeira 10917 Sq km Mazenga 22812 Sq Km Limpopo 17000 sq km - 1.0 2.0 TUMBI PLATFORM 3.0 km 4.0 0 -5.0 Km 0 100 200 OP • Southern Mozambique onshore areas INP Instituto Nacional de Petróleo A GRODED INQUED ہے 1977 23 330 34 Spec Seismic Acquisiton • Zambeze Delta Ofshore#27inp INSTITUTO NACIONAL DE PETRÓLEO NATURAL GAS PROJECT INP_Instituto Nacional de Petróleo#28inp TUTO NAGOVA STRUCTURE OF NATURAL GAS VALUE CHAIN Exploration Processing Transmission Distribution Marketing C P LL Mozambique South Africa Field INP (Regulator in Mozambique) ■ Sasol Petroleum Temane 70% ■ Moz Govt 25% (Via ENH/CMH) World Bank / IFC 5% CPF ■ Sasol Petroleum Temane 70% ■ Moz Govt 25% (Via ENH/CMH) ■ IFC 5% External Financiers INP Instituto Nacional de Petróleo NERSA (Regulator in SA) Pipeline (ROMPCO) ■ Sasol Gas Holdings (50%) ■ SA Govt 25% (Via CEF/Gas) ■ Moz Govt 25% (Via ENH/CMG) Market Sasol Gas external markets ■ Sasol Gas internal markets: . Spring Lights Gas (49%) • Sasol Synfuels • Sasol Oil - Tshwarisano 25% - LFB 75% • · Sasol Chemical Industries#29inp INSTITUTO NACIONAL DE PETRÓLEO Secsi-filowe Tuli KILIKWANA NATURAL GAS PROJECT NORTHERN PROVINCE WATERRER GE Pietersburg ZIMADENP M MB QUE BANHINE P Unigubc *RUGE * F -Flares Noldpruit NORTII- WEST- Pretoria DOUTEND EASTERN TRANSURAJ DRAKENSBE Soweto Johannesburg SOUTH AFCA Lanarakills Vaal INP Instituto Nacional de Petróleo Mbabane Kuzluseni SWAZILAND Maputo Exai Xal Irhamban Mozal aluminium smelter#30inp TUTO NACIONAL DE PETROLO GAS PRODUCTION - EVOLUTION Natural Gas Yearly Production Natural gas (MGJ) 140 120 100 80 60 60 40 40 20 20 ■Produced gas (MGJ) ■ Exported gas (MGJ) Royality gas in kind (MGJ) 800,000 2004 2005 2006 2007 2008 2009 2010 Year Fev 2011 700,000 600,000 Condensate (bbl) 500,000 400,000 300,000 200,000 INP Instituto Nacional de Petróleo 100,000 Condensate Yearly Production 0 2004 2005 2006 2007 2008 2009 2010 Fev 2011 Year Produced (bbl) sold (bbl)#31iní INSTITUTO NACIONAL DE PETRÓLEO CNG Buses, 2007 CNG PROJECTS SAULED GAULED OMGC OMGC INP Instituto Nacional de Petróleo GALILEO Compressed Natural Gas System, 2007 www MGC OMGC GALILEG OMGC#32INSTITUTO NACIONAL DE PETRÓLEO NATURAL GAS EXPANSION PROJECT Ongoing the expansion of the natural gas project from 120 to 183 MGJ/year: ◆ Development of the gas fields ◆ The Central Processing Facility (CPF) ◆ The gas transmission pipeline. ◆ Further expansion is being considered in the near future to increase capacity to 300 MGJ/year. ◆ Foreign investors interested in implementing new projects in Mozambique based on natural gas: Iron reduction Fertilizers ◆ Power generation Possible LNG INP Instituto Nacional de Petróleo#33inp INSTITUTO NACIONAL DE PETRÓLEO CHALLENGES INP_Instituto Nacional de Petróleo#34TUTO NACIONAL DE PETROLE CHALLENGES ◆ New offshore seismic data acquisition & reprocess some of old seismic data National capacity building to operate the fields, CPF and pipeline Maximize the use of natural gas in the country Promote the local processing of hydrocarbons to add value to indigenous resources Medium and long term training of national for management of petroleum resources INP Instituto Nacional de Petróleo#35STITUTO NACI DE PETRÓLEO FINAL REMARKS INP_Instituto Nacional de Petróleo#36INSTITUTO NACIONAL PETRÓLEO انال FINAL REMARKS Mozambique offers good exploration opportunities: Good prospective acreage available Favourable legal, regulatory and fiscal framework Adequate infrastructure for natural gas transmission; Political stability Mozambique offers good investment opportunities: The socio-economic indicators are steadly growing GDP is growing on average of 7 to 8% per year The inflation rate is under control and the local currency the new metical is stable The fiscal incentives for foreign investment are attractive The infrastructures such as roads, telecommunications are improving substantially INP Instituto Nacional de Petróleo#37inp INSTITUTO NACIONAL DE PETRÓLEO You are Welcome to Mozambique Thank You! INP Instituto Nacional de Petróleo 1 More info: www.inp.gov.mz