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Mozambique to invest $100m in oil and gas

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Mozambique will spend $100 million over the next three years to produce and distribute fuel and gas products in a bid to expand its energy sector to attract foreign investors, the government said on Wednesday.

The country’s mineral resources ministry said the funds would be given to the state-run Empresa Nacional de Hidrocarbonetos (ENH) from 2009 to 2011 to support the company’s expansion programmes for oil and gas.

It said ENH would partly use the financing to enhance production, processing, distribution and transportation of fuel and gas products.

“(The financing) allows ENH to define the parameters in which the state will participate in the petroleum sector (and also for) commercialization of hydro carbons in partnership with local and foreign entities,” the ministry said in a statement.

ENH chief executive officer Nelson Ocuane, separately told Reuters that the financing would increase prospects for the company to secure more funds for fuel and gas projects.

ENH and some foreign investors recently announced plans to spend $1.44 billion in gas and oil exploration in Mozambique by 2011 as part of efforts to maximise Mozambique’s gas and oil potential of up to 15 trillion cubic feet.

The southern African country is encouraging foreign companies to participate in exploration of oil and gas, particularly in its resource-rich central and northern regions.

At least 14 companies, mainly from Norway, Canada, Italy and the United States. are currently involved in exploration of hydrocarbons in Mozambique.

The exploration expansion is also intended to attract foreign investment in one of Africa’s poorest countries, which is struggling to rebuild an economy damaged by a civil war that ended in 1992.

Sasol, South Africa’s petrochemical group, has invested $1.2 billion to develop an extensive pipeline network from Mozambique’s Pande and Temane gas fields to South Africa.

Sasol has been involved in at least three exploration blocks in Mozambique, including Temane where significant gas reserves were discovered with proven potential of 5 trillion cubic feet.

Gas was discovered in Mozambique in 1962, when Gulf Oil drilled a successful well in the Pande field in the southern province of Inhambane, but 17 years of crippling war prevented further investment.

Source: Reuters

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