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