No official copy of the new oil law, approved by the government, has been published. A new oil law should not be expected to introduce significantly different tax conditions, defined primarily in separate tax provisions and applicable exploration and production concession contracts. This new oil law should recognize that gas, not oil, is Mozambique`s main hydrocarbon resource and will establish a clearer framework for infrastructure development to take into account the likelihood that Mozambique will be able to host major export infrastructure projects. A new oil law is also expected to address heavier environmental obligations; (ii) enhanced obligations for local content; and (iii) financial advertising obligations. The following table compares the main tax and other conditions of PSA 2008 and PSA 2013. The distribution of hydrofuels is based on daily production volumes. While they appear to have an impact on their application, we know from experience that they are highly negotiated and vary depending on the degree of participation in the CST. Although this is a new provision for Tanzania, you often see these types of bonus rules in other countries like Angola and Nigeria, but what is different in the Tanzanian model is that it is a minimum requirement, whereas it is more common to consider these bonuses as negotiable. East Africa is becoming one of the world`s largest new gas regions, following a series of major discoveries that producers intend to monetize primarily through LNG sales to Asia.
Despite the discovery of material gas in this region, East Africa remains a border area and legislation and policy are developing to seize the opportunities offered by large-scale gas exploration and production activities. In 2012, Mozambique published a revised draft oil law that will replace the 2001 oil law. The new law was approved by the government in April 2013 and submitted for ratification by the Council of Ministers. Until recently, the Instituto Nacional de Petroleo (INP) had indicated that the new oil law would be adopted by the end of 2013. Recent signs indicate that the new oil law will be approved by Parliament in early 2014. The new oil law will come into force 30 days after it is published in the government newspaper, the Boletim da Republica. It appears that the delay in the adoption of the new oil law will lead to a further delay in the proposed 5th cycle of licensing for 12 new onshore exploration blocks off the coast of Mozambique. Participation in production, to which the foreign oil company takes over the exploration, development and production activities. PSA 2013 applies to blocks insured during Tanzania`s 4th licensing cycle, launched in October 2013 with offers due in May 2014.
PSA 2013 aims to encourage deepwater exploration while increasing revenues from oil and gas activities in Tanzania, strengthening the tax conditions set out in PSA in 2008. PSA 2013 will also strengthen the influence of the Tanzania Petroleum Development Corporation (TPDC). The Tanzanian government has also recently published its electricity and gas downstream policy. A new, broader hydrocarbons law is expected to be passed by the end of 2014, replacing the 1980 Petroleum (Exploration and Production Act) framework. The contractor is required to create a dismantling fund within two years of the start of commercial production.