ENI MUST PAY MAPUTO 350 MLN USD IN CAPITAL GAINS TAX FROM SALE OF STAKE IN GAS FIELD

MAPUTO, Italian energy company ENI has been assessed 350 million US dollars in capital gains tax to be paid to the Mozambican government following its sale of part of its stake in a gas field to United States energy giant ExxonMobil.

On March 9, ENI announced a sale and purchase agreement with ExxonMobil, under which ExxonMobil will pay 2.8 billion USD for a 25 per cent stake in offshore Area Four in the Rovuma Basin in northern Mozambique.

Speaking on behalf of the Mozambican Tax Authority (AT) here Wednesday, following a meeting with ENI, Anibal Mbalango, the deputy general manager for planning and studies and international co-operation, explained that “on the basis of available information supplied by ENI, the tax due will be approximately 350 million dollars”.

Mbalango added that the sale still required approval by the Mozambican authorities and the other partners in the Area Four consortium. Following that approval, ENI will have 30 days to pay the tax.

Currently, ENI controls a 50 per cent indirect interest in Offshore Area Four, owned through ENI-East Africa, which holds 70 per cent of the concession. Another 20 per cent, held via ENI-East Africa belongs to the Chinese company CNPC. The other three partners, with ten per cent each, are Galp Energia of Portugal, Kogas, and Mozambique’s National Hydrocarbon Company (ENH).

The total gas discovered so far in Area Four is 85 trillion cubic feet. Plans are in an advanced stage to set up a floating liquefied natural gas (FLNG) facility in the Coral South gas field. So far, the consortium has invested about 2.8 billion USD in Area Four, and it is estimated that the FLNG project will cost a further eight billion USD.

An agreement has already been reached under which all the gas produced from the FLNG plant will be sold to the British company BP over a 20-year period. Production of LNG is due to begin in 2022.

However, the Final Investment Decision cannot take place until CNPC formerly commits itself to the investment (all the other partners have now approved their share of the investment).

Under the deal with ExxonMobil, ENI will continue to lead the FLNG project whilst ExxonMobil will lead the construction of onshore liquefaction facilities.

Neighbouring Area One, where the US company Anadarko is the operator, holds an estimated 75 trillion cubic feet of gas. Anadarko is planning to build an onshore LNG facility to produce 12 million tonnes of LNG a year. Later it hopes to raise production to 20 million tonnes a year. However, given the expense and complexity of the project, some analysts expect that ExxonMobil will eventually also take a large stake in Area One.

Source: NAM NEWS NETWORK