REPUBLIC OF MOZAMBIQUE ___________
MINISTRY OF MINERAL RESOURCES AND ENERGY
OVERVIEW OF MOZAMBIQUE MINING AND ENERGY SECTORS:
OPPORTUNITIES AND CHALLENGES
ANTONIO MANDA National Director of Cooperation and
Planning [email protected]
TABLE OF CONTENTS: (I) GENERAL INFORMATION OF THE COUNTRY
(II) ENERGY AND MINERAL RESOURCES POTENTIAL (III) ELECTRICITY REGULATION (IV) ENERGY SUPPLY CONSTRAINS, GENERATION PROJECTS,
CHALLENGES AND MAJOR ACHIEVIMENT (V) PETROLEUM SECTOR AND REGULATIONS
(I) GENERAL INFORMATION ABOUT MOZAMBIQUE
1. Population: 28,9 million. 2. Area: 799.860 km2 . 3. Location: Southern Africa 4. Currency: Metical -(1USD/60MT) 5. Official Language: Portuguese 6. Energy Strategy – In process of
Revising. 7. Electricity Law - In process of
Revising. 8. Electricity Master Plan – updated and
Approved 9. National Electrification Strategy -
Approved 10. Renewable Energy ATLAS – Approved. 11. Renewable Energy Strategy –
Approved. 12. Renewable Energy Policy – Approved. 13. Renewable Energy Feed-in-tariff –
Approved. 14. Gas Master Plan – Approved. 15. Coal Master Plan – Final Draft Report. 16. Access to Electricity - 28,5% 17. Installed Capacity – 2.678 MW
Mozambique
Government of Mozambique/Ministry of Mineral Resources and Energy (MIREME): Police making and overal supervision of the Mineral and Energy Sectors. ARENA/National Regulatory/Advisory Board. FUNAE – Energy Fund: Mainly involved with off-grid electrification. Electricidade de Moçambique (EDM) – Utility Company: 100% owned by the State, with the responsibility to generate., transmission, distribute and commercialize electricity throughout the country. Hidroeléctrica de Cahora Bassa (HCB): an IPP owned by Mozambique Government (92,5%) and REN of Portugal (7,5%). Moz Transmission Company (MOTRACO): an ITC, Owned by EDM, ESKOM and SEB , 33.33% each, responsible to supply electricity to MOZAL - aluminum smelter in Moz and wheeling of power to EDM in Moz and SEC in eSwatini.
KEY PLAYERS IN THE ELECTRICITY INDUSTRY
(II) ENERGY RESOURCES POTENTIAL
Mozambique is abundantly endowed with both fossil and renewable energy sources and provides the necessary conditions to develop energy projects, from small and medium to large scale, giving an effective and efficient response to the increased demand for power.
In term of energy resource potential the hydropower potential in Mozambique is estimated to be 18,000 MW with a corresponding total energy output of 95,000 GWh/year, 200 Tcf of natural gas, plus 25 billion tons of coal reserve, 23 TW based on solar and 3,900 MW based on wind.
Around 95% of power generated in Mozambique is Hydro; Hydro potential is >60% of the total energy resources in the Zambezi Valley;
The first gas discourver happend in1963
in Inhambane Province - (Pande and
Temane sites) with 3.5 Tcf. The production
started in 2004.
The major gas discourver happend in Rovuma Basin - 200 Tcf.
The main reserve located in Moatize – Tete
province with 25 bilion tonnes.
The production started by VALE of Brasil and Rio Tinto of Australia in 2011.
Water Wind Solar
Mozambique has potential of
24 TW. Identifyed potential of
600 MW can be developed and
connected to the grid immediatelly.
Mozambique has potential of
18.000MW. Only 2300MW
corresponding the installed
capacity.
Mozambique has potential of
4.5GW. Identifyed potential of
1.1GW can be developed and
connected to the grid
immediatelly and 230MW with ranking of high potential.
In order to better understand the renewable energy contribution, the Government of Mozambique concluded the Renewable Energy Atlas and an appropriate regulatory framework for market creation (REFIT).
(III) ELECTRICITY SECTOR AND REGULATION
The Government is committed to creating a legal framework, which is stable and that defines clearly the role of the state and other actors including private investors. The objective is to install and framework that provides confidence for all economic agents while adequately protecting consumers’ interests.
By working towards the harmonization of rules and regulations with regional initiatives the Government aims to support regional integration and reflect in the national legal framework the best practices in environmental protection. Mozambique has its own Oil Law and Electricity Law.
Part of competencies of the Ministry of Mineral Resources and Energy: To formulate energy policies and secure they implementation;
To elaborate Medium and long term development plans
regarding with project implementation;
To maintain energy balance and energy demand forecast.
Institutional Framework
Electricidade de Moçambique (EDM)
EDM - Public owned enterprise established by Decree 28/95, July 17th 1995 is the entity responsible for power generation, transmission, distribution and commercialization in Mozambique, including management of the National Electricity Grid. Energy Fund (FUNAE) FUNAE, an independent fund, established by Decree 24/97 July 22nd 1997 obtains and administer funds to support private and public production and distribution of energy, and increase the rural population’s access to modern forms of energy.
Institutional Framework
Regulator (ARENE) ARENE was created as regulatory body based on the 1997 Electricity Law. The ARENE is a financially and administratively autonomous institution, responsible for defending public interests and also performs some regulatory functions, namely: To monitor the performance contracts signed between the
Government and EdM;
To present recommendations regarding the technical and commercial quality of services provided by EdM and other electricity distribution concessionaires; and
To analyse and present recommendations for the revision of existing electricity tariff calculation methodology, as well as the principles and methodology of cross-subsidies among different categories of present and future consumers.
Institutional Framework
(IV) ENERGY SUPPLY CONSTRAINS, GENERATION PROJECTS,
CHALLENGES AND MAJOR ACHIEVEMENTS
Mozambique government have been undertaking important reforms in order to attract private sector investors and are strongly committed to the improvement of their economic competitiveness and people living standards through the appropriate use of the modern energy.
Currently Mozambique has significant number of ongoing projects, whose implementation will contribute substantially to increase the availability of energy to meet the growing national needs, including the sale of the surplus to the regional market. The location of the power generation projects does not necessary coincide with targeted load centers. The reality shown that we need massive investments for the construction of long distance transmission lines, to accommodate evacuation of power from the generation to the consumption centers.
1500 km
405 km
410 km
generation
Generation
Generation
large country: The location of the power generation sites does not necessary coincide with targeted load centers. Cahora Bassa power plant is the main source 77,5% and 22,5% coming from Chicamba and Mavuzi hydropower plants, CTRG, CTM, Gigawatt, Kuvaninga and Temane. limitation of 1120 km transmission capacity of the existing 220 kV Central-North line . Limitation of Contratual HVDC transmission line to south of Mozambique from Cahora Bassa via South Africa(300 MW).
(III) ENERGY SUPPLY CONSTRAINS AND CHALLENGES
For a large number of African countries, individual national action will not be enough to bridge the energy gap because of the lumpiness and costliness of energy investments and, the uneven distribution of energy resources. Consequently, making the best use of hydropower, coal, natural gas, and other resources will require regional integration and the building of a regional energy infrastructure.
Currently Mozambique has transmission transfer capacity in the south of the country to the SADC region in order of 1400 MW and through Zimbabwe a transfer capacity in order of 450 MW. The transmission projects in general would enable development of a number of least cost power projects, and allows this power to reach other members of SADC, and in particular, South Africa, which is the largest regional consumer.
Mozambique Regional Transmission Backbone Project – STE
The supply to the North-East of Mozambique consists of a single 220kV line from
Chimuara (Caia) to Nampula and a number of radial 110kV lines fed off this system. The construction of the Backbone - Central-South Transmission Line Project will facilitate evacuation of all power generated by different sources (hydro and coal) from Tete to Maputo and to Southern Africa Region.
Caia – Nacala Transmission Line Project and Backbone Project
Em promoção a fase 1 da linha Tete – Maputo na secção Vilacunlos – Maputo e vai assegurar o transporte de energia do projecto da Central Térmica de Temane (400 MW);
Mobilizado 200 dos 600 MUSD para o projecto da Linha Caia – Nacala que inicialmente vai ser implementado a Fase na secção Caia – Alto-Molócue com a conclusão para 2022;
HVAC lines at 400 kV + 5 substations
HVDC lines at 500kV with 2 conversion
stations in Tete and Maputo Provinces
Moatize
(300 MW)
Mphanda
Nkuwa
(1500 MW)
CTRG
(175 MW)
Boroma
(200 MW)
Lúrio
(120 MW) Cahora Bassa
Norte (1245MW)
Lupata
(600 MW)
Massingir
(25 MW)
Benga
(450 MW)
Mavuzi 2 & 3
(60 MW)
Alto-Malema
(60 MW)
Kuvaninga
(40 MW)
Gigawatt
(100 MW)
Aggreko
(222 MW)
Temane
(400 MW)
Ncondezi
(300 MW)
Palma (GL
Energy Africa)
(250 MW)
Location of the Generation Projects and Achievements
coal
hydro
gas
Metoro (40MW)
Mocuba (40MW)
Solar
Current Status Of Major Generation Projects And Achievements
(V) PETROLEUM SECTOR AD REGULATION
Organisational structure of the Petroleum Sector in Mozambique
The Petroleum Law of 2001 followed by the Petroleum Law of 2014 form the legal and regulatory foundation for granting rights to commercial entities allowing Petroleum Operations and establishing the governance structure clarifying roles and interests:
Resource Owner
Commercial
Interest
Regulator
Qualified oil companies
awarded Concession
Contracts and being
Concessionaires and
ENH, E.P. as the
commercial participation
of the State.
Hidrocarbonetosde Moçambique
Instituto Nacional de Petróleo
INP is the regulatory authority for the petroleum operations
(exploration, production and transport of hydrocarbons).
o Regulate, administer and promote oil operations;
o Evaluate and update knowledge of oil potential;
o Define areas subject to concession, research and production or recognition contracts;
o Authorize the construction, implementation and operation of petroleum infrastructures;
Empresa Nacional de Hidrocarbonetos
Is the state oil company established by the Law 3/81.
o Participates, as a stakeholder, in the natural gas project.
o Participates in the exploration, with carried interest, in association with oil companies in exploration.
Hidrocarbonetosde Moçambique
Mozambican Regulatory System - EPCC
Core Elements of the Petroleum legal and regulatory structure:
Petroleum Law No. 21/2014 of 18 August
Petroleum Operations Regulations established through Decree of 31 December 2015
Updated Model Exploration and Production Concession Contract (2016)
Fiscal Law No. 27/2014, from 23 of September on Petroleum Operations
Model EPCC 2015
Petroleum Operations
Regulations 2014
Petroleum Law 2014
Legend Administrative law
Contract law
Fundamentals of Petroleum Policy
Polítical Fundaments Related aspects
Optimized and sustainable production
Ensure income and revenue collection
Stimulate industrial development
Ensure an efficient regulatory and administrative system
Management of resources, the work program
and guarantee of exploitation and sustainable
development
Tax terms and production sharing and total
control over projects, stable tax regime in order
to balance the risk-sharing between
government and investor
Business opportunities for local businesses,
employment and training for nationals,
technology transfer and domestic supply of
natural gas and petroleum products
Transparent, predictable and accountable legal
framework that creates a better business
environment and opens up investment
opportunities
Recognition of the importance of transparency and predictability of the legal system which application will assist in sustaining a open and accountable business environment and open up opportunities for investors and stakeholders;
The discoveries will allow development of projects serving the international, regional and local Natural Gas markets;
The improvements to the legislation will allow the Government to engage or allow increased mapping of conventional and unconventional resources
Improvements to the PL and POR and the promotion of a contract for the construction and operation of Facilities will ensure consistent regulatory system for the entire Upstream sector;
Activities and infrastructure along the value chain from the Deposit to shipment of commercial specification commodity included in upstream legal framework;
PETROLEUM POLICY DEVELOPMENTS - Petroleum Policy Principles
The Gas Master Plan is:
It is an evolutionary technical plan for the development of the gas sector. It is a detailed roadmap for strategic, political and institutional decision-making on the basis of which investments can be designed and implemented in a fully coordinated manner.
It is a dynamic tool to guide policy development in the gas sector in Mozambique.
It favors a stable and transparent regime of regulatory, fiscal and financial policies in order to promote the development of the gas sector in order to benefit the country as a whole.
Instrument of hierarchy of development decisions, establishing priorities in the allocation and use of natural gas.
28
Gas Master Plan
Need for the Gas Master Plan:
The natural resources existing in the country to be used in a sustainable way, that is, combining the economic, social and environmental dimensions;
Natural resources must, first of all, meet Mozambique's development needs;
Ensure the use of gas in the national industry.
To react to the requests of gas for the development of new projects.
Gas Development
Offshore production in the Rovuma basin, supported by Palma's LNG
infrastructure;
Continuaty of gas exploration and production in other areas and development
of CBM in Tete;
Significant contribution of natural gas to energy supply; and use in the
fertilizer, petrochemical, GTL and thermal power plants;
Development of industrial zones in Palma, Pemba and Nacala based on the
availability of natural gas from production in the Rovuma Basin;
Construction of pipelines (expansion of existing ones) to support the expansion
of Small and Medium Enterprises (SMEs);
Construction of the North-South gas pipeline linking Palma to Maputo,
leveraging the emergence of industrial zones throughout the country;
Gas distribution in the cities of Matola, Maputo, Palma, Pemba, Nacala,
Nampula, Beira, Quelimane and Mocuba and Vila de Macuse with a view to
increasing their domestic consumption. 29
Gas Master Plan Objectives
The objectives to be achieved, by 2030, are divided into two aspects:
Country development based on gas income
Diversified economy, modernization of agriculture and higher rate of electrification;
Construction of major infrastructures, namely roads, ports, railways, airports and thermal power stations;
Greater industrialization with the emergence of SMEs inspired by megaprojects;
Increase in skilled labor. Increase in professional services (engineering, law, economics, management, design, accounting, etc.). National cadres begin to assume leadership positions in megaprojects;
30
Gas Master Plan Objectives
Provision of Natural Gas for the Domestic Market
Company Quantities allocated (MMSCF/D)
Goal
GL Energy Africa 41,8 Power Generation (250 MW)
Shell Moçambique BV 310-330 Production of 38 thousand barrels of fuels (GTL Diesel, naphtha and kerosene and power generation (50 -80 MW)
Yara International 80-90 Production of 1.2 - 1.3 MTPA of fertilizers (Ammonia / Urea) and power generation (30-50 MW)
The Council of Ministers approved the Memorandum of Understanding between Anadarko
Mozambique Area 1 and MIREME for the supply of 400 MMSCFD for the development of projects
in the national market over the 25 years of the project.
Based on the priorities identified on the Gas Master Plan, a tender to allocate this gas was
launched in 2016. The results are shown in the table below.
→
Explored basins
Passive Continental Margin
basins:
Rovuma Basin (1)
Mozambique Basin (2)
Unexplored basins
Graben and Rift Type
basins:
Maniamba Basin (3)
Lake Niassa Basin (4)
Lower Zambeze Graben (5)
Middle Zambeze Basin (6)
Sedimentary Basins
1
2
3 4
5
6
Biding Rounds
1st - 1984
2 nd - 2005
3 rd - 2007
4 th - 2009
5 th - 2014
6th Bid round to be announced in 2019
Next Bids Rounds (6th) Roadmap
Nomination Process (2 months), 2018-2019
Launching of the bidding round - Early 2019
Bid proposals submition (6 months)
Bid evaluation (3 months)
Areas Award
EPCC Call back meetings
Future Mozambique Public Bid Round
Wentworth Resources (85%) ENH (15%)
AMA-1 (26.5%)
Mitsui (20%)
BREM (10%)
ENH (15%)
BPRL (10%)
PTTEP (8.5%)
ONGC Videsh (10%)
EEA (70%),
ENH (10%),
KOGAS (10%) Galp Energia (10%)
SPM (70%),
ENH (25%)
IFC (5%)
SPM (100%)
SPM (85%)
ENH (15%)
Rovuma Onshore
Area 4
Area 1
Pande & Temane (PSA)
Block 16&19
Pande & Temane (PPA)
Active Concessions
Investments in Oil & Gas Sector
3.24
5.05
0.31
1.03
0.35 0.29 0.27 0.03
1.06
-
1
2
3
4
5
6
Total Investiments (bi USD) (2004-2017)
→
On going Projects
FID taken 2018 for Fcoral South FLNG afteer
approval of a Development Plan
Anohter POD for a much bigger development being
discussed (Mamba & Prosperidade Projeccts)
Golfinho/Atum Development Plan aproved
in Feb. 2018.
Pande & Temane
Área 1&4 –
Prosperidade/Mamba
Anadarko Area 1
Golfinho/Atum
Inhassoro
Eni Área 4- Coral
Ro
vu
ma
Ba
sin
M
oza
mb
iqu
e
Bas
in
Implementing Development Plan
On Production
Projects
Ph
ase
Exploration
Appraisal Development Productio
n Demobizati
on
Mozambique Basin- Pande and Temane Natural Gas Project
INP (Regulator Mozambique) NERSA (Regulator in South Africa)
Fields
Sasol Petroleum
Temane (SPT) 70%
Gov. Moz. 25%
(ENH/CMH)
World bank /
IFC 5%
CPF
Sasol Petroleum
Temane (SPT) 70%
Gov. Moç. 25%
(ENH/CMH)
IFC 5%
Pipeline (ROMPCO)
Sasol GAS
Holdings (50%)
Gov SA 25%
(CEF/gás)
Gov. Mozambique.
25%
(ENH/CMG)
Market
External market
(South Africa)
Domestic market
Comercialization Production Exploration Distribuitio
n Transportation
Amounts of Gas Allocated to the domestic Market
Company Amount of Gas
allocated (Millions
GJ/A)
Goal
ENH 0.20 Power Generation in
Vilanculos
MGC 3.0
Gas Distribution in the
Matola and Machava
Industrial Zone
Kuvaninga 3.0 Power Generation in
Chockwé
GS Cimentos 1.75 Cement Factory
Autogas 0.80 Gas for vehicles
Lonrho 0.5 Tomato processing
factory
Royalty Gas Allocation
Qty (MGJ/a) Qty (Tcf) Allocated
Percentage (%)
South Africa
(exportation) 147 3.53 80
Mozambique
(domestic
consumption)
36 0.85 20
Total 183 4.38 100
Company Allocated
Amount
(Millions GJ/A)
Project and location
EDM/Sasol
(CTRG) 11
Power Plant to generate
140 MW in Ressano
Garcia
Gigawatt lda
8
Power Plant to generate
100MW in Ressano Garcia
ENH/EDM
6
Conversion of two EDM
Turbines and Natural Gas
Distribution in Maputo
City and Marracuene
Electrotec 2 Power generation
Commercial Gas Allocation for the domestic
market
Area 1&4 - Prosperidade/Mamba Complex
Area 1- Golfinho/Atum LNG Area 4 - Coral FLNG
Unified development of 24 Tcf
(12 Tcf for each area) Unitization agreement
submitted to Government
2 trains Production of 12 MTPA of LNG
(1) floating unit ; Liquefaction capacity of 3,37
MTPA
Barq-4
Mam NE-1
25 km
Lag-2
Cam-1
Barq-4
Cor-1
Win-2
Mam NE-1
Tub-1
Golf-1
Lag-3
Barq-1
Barq-3 Mam N-1
Barq-2
Mam S-1 Lag-1
Rovuma Basin – Exploration and Production Concession Contract
Mozambique offers countless opportunities for investment throughout the value chain (upstream, midstream e downstream);
Approval of Development Plans will contribute to production infra/structures
hence booting exploration interrest in Mozambique;
Implement all aspects of policies and regulations in an integrated medium-term manner, in order to influence the level of Petroleum operations and the number and type of investors that is hoped to attract;
The legal and institutional framework is endowed with instruments and mechanisms that allow a transparent management of activities and revenues resulting from petroleum operations
National participation is a key element in ensuring sustainable development.
Important onsiderations – Petroleum Sector
THANK YOU !
