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State Budget Proposal 2023: Rovuma Gas is Worth 0.3% of State Revenues

State Budget Proposal 2023: Rovuma Gas is Worth 0.3% of State Revenues

Rovuma gas is expected to represent 0.3% of the total State revenue in 2023, the first full year of production from the Coral Sul platform, according to the State Budget (OE) proposal for 2023.

“Of the amount foreseen for State revenue, 1.25 billion meticais comes from natural gas from Area 4 of the Rovuma Basin,” reads the document to be discussed in parliament and published this Tuesday, October 18, on the portal of the Ministry of Economy and Finance.

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“The figure comes from the medium-term fiscal scenario,” a source from the ministry added to Lusa.

The Rovuma gas, off Cabo Delgado (a province affected by an armed insurgency and humanitarian crisis), is a 0.3% share of the total revenue collection that is expected to reach 357 billion meticais in 2023.

In addition to the OE, gas revenues (along with others from the extractive sector) are expected to help create a Sovereign Fund later this year, into which 40% of them will be channelled, according to the draft law.

Overall revenues from Rovuma gas are expected to grow as the exploitation of the reserves progresses.

“The platform led by Italian oil company Eni will produce 3.4 million tonnes of liquefied natural gas per year for BP”

The Coral Sul floating platform, anchored off Cabo Delgado, has been extracting gas for the onboard liquefaction plant since mid-year.

The first export cargo ship is already in Cabo Delgado and connecting to the plant to be filled in the coming days.

The platform led by Italian oil company Eni will produce 3.4 million tonnes of liquefied natural gas per year for BP (which has bought the production for 20 years).

There are two other larger projects for the Rovuma basin, led by TotalEnergies and Exxon Mobil/Eni, which can produce four to five times as much each.

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However, these other projects envisage onshore liquefaction plants on the Afungi peninsula and are awaiting decisions from the oil companies for construction to go ahead, given the insecurity in the region.

In forecasts made in 2020, with the three projects operating, Mozambique expected to receive US$96 billion in the lifetime of the Rovuma gas, almost five times the country’s annual gross domestic product (GDP).

However, armed violence in Cabo Delgado has put on hold onshore investments and only the Coral Sul platform is completed and operational.

The revenues from the Rovuma gas were part of the renegotiation accepted in 2019 by the holders of Mozambican ‘eurobonds’ (sovereign debt of about US$726 million that originated in the public company Ematum) and which made it possible to postpone its maturity from 2023 to 2031, as well as to reschedule the remuneration.

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