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Area 4: Galp Can Sell its Stake in the Rovuma Basin Gas Project

Area 4: Galp Can Sell its Stake in the Rovuma Basin Gas Project

Portuguese oil company Galp will be available to sell its stake in the Rovuma basin natural gas project in Mozambique. According to Portuguese newspaper Negócios, the company has handed over the possible implementation of this operation to Bank of America. This financial institution had already been involved in the sale of positions that Galp held in offshore oil blocks 14 and 32, in Angola.

“This is an asset for which there will be no shortage of interested parties,” said a source linked to the sector, cited by the same newspaper. The war in Ukraine has increased the appetite for gas of companies from all geographies, from Europe to the United States, passing through India and China. Galp, questioned by Negócios about this possible sale, declined to comment.

The company announced Monday the sale of its oil exploration and production assets in the country to Somoil – Sociedade Petrolífera Angolana, a subsidiary of Sonangol, for US$830 million.

“This transaction allows Galp to crystallise value from mature upstream assets and support the renewal of our upstream portfolio and our decarbonisation strategy” explained the company’s CEO, Filipe Silva, in a statement sent to the CMVM. With this move, Galp abandons prospecting in Angola, an activity in which it had started in 1991.

The sale of the stake in Mozambique is part of a broader plan that involves Galp’s exit from Africa in the areas of exploration and production. Along with Angola and Mozambique, the oil company also has interests in these areas in Sao Tome and Principe and Namibia.

In Mozambique, the national oil company has a 10% stake in the consortium for development of natural gas exploration in Area 4, in the Rovuma basin, in Cabo Delgado province. The Italian Eni is the operator with an indirect stake of 50%, via Eni East Africa, which has a 70% stake in Area 4. Kogas and ENH, meanwhile, have a 10% position each in the project, while China National Petroleum Corporation holds a 20% indirect stake through Eni East Africa. In 2017, the total investment planned for the Area 4 project, christened as South Coral, stood at US$7 billion.

The fact that the investment in this project is sizeable is seen as one of the reasons why Galp has indicated to Bank of America to seek potential buyers for its stake in Area 4. In October last year, the then still CEO of Galp, Andy Brown, valued the Coral Sul project: “it will put Mozambique on the map of LNG [liquefied natural gas] as an important global supplier. LNG remains a crucial part of energy supply, now and in the future, and Mozambique will play a central role, complementing the United States and Qatar.”

The development of natural gas projects in Mozambique was compromised by the attacks by Islamic terrorists in Cabo Delgado province. The first happened in the town of Mocímboa da Praia in October 2017, and in March 2021, following a strong offensive by terrorists in Palma, TotalEnergies, the main operator, suspended activity in the region. That is, since then, the natural gas exploration project in the Rovuma basin has been in a “water bath”.

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In Namibia, Galp has been present since 2012, holding two exploration licences located offshore the country: the PEL 82, in the Walvis basin, and the PEL 28 in the Orange basin. The concessions, in which Galp has an 80% stake, cover a total area of about 20,000 km2 and are located in emerging provinces, where the existence of hydrocarbons has already been proven.

In São Tomé and Príncipe, Galp began its activity in 2015, having purchased a 45% stake in Block 6, of which it is the operator. A year later it strengthened its interest in oil prospecting in this country, acquiring a 20% stake in Blocks 11 and 12.

Meanwhile, the Diário Económico contacted Galp to find out whether this information corresponds or not to the position of the Portuguese oil company, which decided not to confirm or deny the news, preferring not to make any comments at this time.



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