OPPORTUNITIES AND CLIMATE FOR INVESTMENT IN MOZAMBIQUE

1. NOT AN OFFICIAL UNCTAD RECORD OPPORTUNITIES AND CLIMATE FOR INVESTMENT IN MOZAMBIQUE Arsénio Mabote Chairman, INP INP_ Instituto Nacional de Petróleos

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 MOZAMBIQUE MAPUTO INP_ Instituto Nacional de Petróleos

3. EXPLORATION OPPORTUNITIES INP_ Instituto Nacional de Petróleos

4. Two main basins: • ROVUMA BASIN • NORSK HYDRO • MOZAMBIQUE BASIN • Petronas & ENH • Sasol & ENH • DNO & Wilrusco • BANG & CLOVIS E&P INP_ Instituto Nacional de Petróleos

5. MOZAMBIQUE BASIN INP_ Instituto Nacional de Petróleos

6. MOZAMBIQUE BASIN • 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. Background 2000m 200m Offshore Area • 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) Onshore Area INP_ Instituto Nacional de Petróleos

7. OPEN ACREAGES: • 25 blocks (offshore) • Onshore area • Buzi Block with gas discovery INP_ Instituto Nacional de Petróleos

8. DATABASE • 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

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

10. Zambezi Delta Schematic Cross-Section of the Zambezi Delta Grudja Fm. MOZAMBIQUE BASIN Gas shows and Dead Oil INP_ Instituto Nacional de Petróleos

11. ROVUMA BASIN INP_ Instituto Nacional de Petróleos

12. Tertiary Delta Rovuma River Karroo Horsts ROVUMA BASIN Deposition systems: • East African passive margin basin system • Total Area about 73,000 km2: • 15,000 km2 onshore • 58,000 km2 offshore BACKGROUND • 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 INP_ Instituto Nacional de Petróleos

13. NORSK HYDRO (NOR) • Bidding Round • Starting on July 2005 ROVUMA BASIN • Open Acreages • OFFSHORE AREAS 1, 3, 4 & 6 • ONSHORE AREA • 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. INP_ Instituto Nacional de Petróleos

14. Ponta Uifundo Nicupua Ponta Uifundo Nicupua Marua Marua Nemando Nemando Oil Seep Sampled Oil Seep Reported Gas Seep Sampled Chaonde Ponta Maria Luisa Chaonde Ponta Maria Luisa OIL & GAS SEEPS • Several oil & gas seeps were sampled; • Analysis demonstrated natural origin; • Age: Jurassic or older. INP

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; INP_ Instituto Nacional de Petróleos

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 previousframework 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 hierarchicalstructure

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: Contract Law Admin Law Risk Service Contract Concession/ Licensing Production Sharing Contract Exploration Production Concession Contract Contract Increased reliance in new EPCC based system on legislation rather than contract clauses

22. Regulator DNCH Resource owner Commercial Interest ORGANISATIONAL STRUCTURE - OLD Petroleum law the legal foundation for the governance structure of petroleum activities clarifying roles and interests:

23. INP ORGANISATIONAL STRUCTURE - NEW Petroleum law the legal foundation for the governance structure of petroleum activities clarifying roles and interests: Regulator Resource owner Commercial Interest

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

25. You are Welcome to Mozambique Muito Obrigado! Thank you!