TEXAS TEA FOR TWO - MOZAMBIQUE AND US COMPANY

UNCLAS MAPUTO 000326 SIPDIS SENSITIVE SIPDIS AF/S FOR HTREGER PASS USTR FOR PATRICK COLEMAN MCC FOR SGAULL E.O. 12958: N/A TAGS: ECON ETRD EPET EINV MZ SUBJECT: TEXAS TEA FOR TWO - MOZAMBIQUE AND US COMPANY ANADARKO HOPING FOR OIL Sensitive but Unclassified - Not for Internet Distribution. ¶1. (U) Summary. On March 8th the Government of Mozambique and the U.S. oil company Anadarko Petroleum announced that Anadarko had won its bid for exploration and production rights to an offshore block in the Rovuma Basin, off the Mozambique - Tanzania border. Anadarko's concession is expected to be finalized and a signing ceremony held by June. Four other companies also won bids for concessions. End Summary. ¶2. (U) On July 15th, 2005, the Government of Mozambique, via its National Petroleum Institute (INP),launched the Mozambique Second Licensing Round in London and opened up the Rovuma Basin for exploration concession bids. The Rovuma Basin is approximately 250 miles long and 100 miles wide, and is centered on the Rovuma Delta near the border between Mozambique and Tanzania. For purposes of exploration and production, the Government of Mozambique divided the Basin into seven blocks, one onshore and six offshore. Norsk Hydro, a Norwegian company, received concessions to two of the offshore blocks in February of this year as a result of direct negotiations. ¶3. (U) Seven companies bid on the five remaining blocks. In addition to Anadarko, the following six companies presented bids: Rockover (South African),ENI (Italy),Norsk Hydro (Norway),Petronas (Malaysia),Petrobras (Brazil) and Artumas (Canada). The Government of Mozambique awarded Anadarko exploration and production rights to Area 1. Petronas won rights to contiguous Areas 3 and 4, ENI to Area 4 and Artumas to the onshore block. ¶4. (U) Anadarko's 2.64 million-acre block includes approximately 90,000 onshore acres and stretches eastward 35 miles offshore. The block starts at the Tanzanian border, extends southward 100 miles, has water depths that reach down to 6,000 feet and is approximately 460 times the size of a typical Gulf of Mexico block. Anadarko states that it has been reviewing seismic, well and other geologic date for the last three years and believes that the Basin "is similar in nature to the proven world-class petroleum systems of the Niger Delta, Mahakam Delta and the Gulf of Mexico." ¶5. (SBU) Mr. Mabote, Chairman of INP, informed the Embassy that the GRM preferred Anadarko's bid by a very large margin over those of its competitors. Bids were assessed based on the company's technical and financial capacity, proposed development and research programs, proposed community contributions and environmental experience. Anadarko's bid included a four-year initial exploration term with options to extend that phase another four years, as well as a 30-year production term in the event of commercial discoveries. Anadarko believes that it has already identified multiple leads within the block. ¶6. (U) Comment. The Rovuma Basin is one of the few remaining unexplored, geologically-promising basins in the world, according to Anadarko. A large-scale discovery could radically transform Mozambique. It may be several years, however, before exploration yields positive results -- if ever. For the moment, though, Anadarko tells us "we now have a lot of work to do." La Lime