Mozambique has deemed ineligible about $40 million in recoverable costs submitted by natural gas concessionaires in the north of the country between 2015 and 2017.
The concessionaires submitted at the time two billion dollars in costs related to expenses classified as money they can recover under the terms of contracts made with the state.
The INP completed the certification process and about two percent were not considered eligible for recovery, or close to $40 million, reads the report, made public yesterday by the National Petroleum Institute (INP).
Among the reasons for the exclusion of two percent of the recoverable costs presented are the failure to comply with the accounting and financial procedures established in the concession contracts and also the lack of documents supporting the costs, among others.
The concessions, located in the Rovuma basin, are led by Total (Area 1) and Exxon Mobil and Eni (Area 4), and although they have not yet produced natural gas they have already carried out several previous prospecting and engineering works.
The French oil company Total has slowed down the project due to the insecurity in Cabo Delgado, but still maintains its production forecast for 2024, with several infrastructures already built in the Afungi peninsula. It is the largest private investment underway in Africa.
The onshore project in Area 4 was postponed without a date, and only another smaller venture for gas extraction with a floating platform remains.
According to INP, the completion of an audit of recoverable costs submitted by the project of that platform, which started activities in 2017 and is expected to start production next year, is underway. For May, new audits of the recoverable costs of Areas 1 and 4 of the Rovuma basin are scheduled for the financial years 2018, 2019 and 2020, respectively.
INP is finalizing the hiring of the independent consultant who will be responsible for the task.
In the case of the 2015, 2016 and 2017 costs, the certification process was done with the assistance of Bayphase Geologists, Engineers and Investment Analysts, a British company.
The concession contracts provide for certain allowed costs to be recovered, through entitlement to the quantities of gas produced.
