After many years of civil war and political instability, Mozambique is returning to a state of normality and consequently its upstream oil and gas industry is of growing importance in the region. Mozambique's upstream potential appears to lie in natural gas rather than oil. The critical factor in the future exploitation of the country's gas, however, is the emergence of sound commercial criteria for the establishment of a south-east African gas-gathering network capable of serving developing markets in the region.
Substantial reserves of natural gas have been established and Mozambique is likely to become a major producer of gas in the area in the medium term. There are three onshore gas fields, Pande, Temane and Buzi-Divinhe. Pande has reserves estimated to be in excess of 2.1 Tcf,, Temane reserves in the order of 1.0 Tcf and Buzi has recoverable reserves in the order of 10Bcf. Actual gas production is limited to an insignificant amount from the Pande gas field that supplies the needs of local villages.
Mozambique launched its First Offshore Licensing Round on 31 March 2000. This bidding round is offering 14 blocks mainly in the Mozambique Basin covering the shallow and deep Zambezi delta area.
The main players in the upstream industry include: Enron Oil and Gas Resources Inc, Energy Africa, Sasol Petroleum International, Leopardus Resources Limited, Zarara Petroleum Resources, TotalFinaElf SA, Trefoil Ltd, and Lonrho de Provuma Petroleum. BP, Elf and Western are involved in geophysical surveys of offshore areas.
The downstream oil industry relies on imports, mostly from South Africa. Distribution and marketing of fuel products and lubricants is carried out by the state owned oil company Petromoc. Other companies include BP, Mobil, Caltex.
There are three ports in Mozambique, Maputo, Beira, and Nacala which offer an economic supply corridor to neighbouring landlocked countries.
A major project is being negotiated between ENH, the state oil company, Sasol Petroleum International and Enron Oil and Gas to construct a pipeline that will transport gas from both the Pande and Temane gas fields to the Gauteng area in South Africa. The pipeline between Beira and Harare has been extended and is operating close to full capacity even with an expansion through the addition of pumping stations.
The Government's Department of Mineral Resources and Energy regulates the industry.
Control of the country's upstream oil industry rests with the parastatal upstream oil company, Empresa Nacional de Hidrocarbonetos de Mocambique (ENH) which has exclusive rights to explore for and develop petroleum in Mozambique, and is permitted to exercise these rights in association with foreign investors.
Although a number of gas fields in Mozambique were discovered in the early 1960's by Gulf Oil, they remained unexploited owing to continuing civil war and a lack of major gas consumers. Gas reserves have been found both offshore and onshore. The further discovery of large reserves (estimated at more than 60 bcm) of commercially exploitable natural gas in the Pande gas field in Inhambane province and the possibility of utilising natural gas in regional industrial growth has brought renewed interest in Mozambique's upstream prospects by foreign oil companies.
There is no commercial production from Mozambique's fields yet. The Pande fields produce insignificant amounts of gas that are utilised by the villages in the area. There are plans to develop the fields Pande, Temane and Buzi-Divinhe.
The Temane, Sofala and M10 blocks cover a combined area of about 21,500 square kilometres.
The Mozambique national hydrocabon exploration company, Empresa Nacional de Hidrocarbonetos de Mocambique (ENH), is involved both as a licensor on behalf of the government and as a participant in some of the fields.
The downstream oil industry in Mozambique is relatively small and relies on imports mainly from South Africa.
Petromoc is the state owned oil company and controls the major market share. Other companies involved in the industry include BP, ExxonMobil and Caltex.
There are three ports in Mozambique - Maputo, Beira and Nacala. There is an existing pipeline between Beira and Harare. Enron and Sasol will be co-operating on the construction of a single pipeline from central Mozambique to Maputo and the South African markets.
Malawi, Zimbabwe and Mozambique are planning a joint fuel refinery in Mozambique with a capacity of 10,000 bpd. The project is to be funded by the Iranian government.