Petroleum Concession Contracts

The Mozambican Petroleum Law of February 2001 provides for three kinds of concession contracts:
Reconnaissance Contract:
Maximum two years exclusivity.

Exploration and Production Contract:
Exploration period maximum 8 years. Production period maximum 30 years.

Pipeline contract:
Period depends on the project.
The National Institute for Petroleum in the Ministry of Mineral Resources is responsible for negotiating such Concession Contracts on behalf of the Mozambican Government.

Royalty:
The Law sets the royalty at 2 % to 15 %, normally rates are 2-8 % for crude oil, depending on water depth, and 5 % for natural gas, to be taken in kind or in cash.
Corporate Income Tax:
The Corporate Income Tax rate is 32% of net profit, with no ring fencing. Development costs are depreciated over four years.
Fiscal Benefits to Investors:
The Code of Fiscal Benefits provides various investment incentives for the petroleum sector, such as exemption from import fees and VAT.