Galp will request an evaluation of the Mozambican state’s conduct regarding a dispute over capital gains tax arising from the sale of Galp’s stake in Area 4 of Mozambique. This notification marks the first step towards initiating arbitration proceedings, as stated in a communication sent this morning to the Comissão do Mercado e Valores Mobiliários (CMVM).
The “dispute under international reciprocal promotion and protection of investments” has also been communicated to the President of Mozambique, Daniel Chapo, in a letter from the Portuguese oil company, outlining a timeframe for the parties to reach an understanding.
At issue is the amount of taxes payable by the Portuguese company related to its exit from the consortium intended to operate Area 4 of the Rovuma basin, which Galp sold in March to a subsidiary of the Abu Dhabi oil company for $1.05 billion, nearly €900 million.
Though the amounts are not specified in Galp’s market and press releases, in June, it was reported that the Mozambican Tax Authority considered the Portuguese company owed $300 million, approximately €256 million, while Galp believes the correct figure is around $8 million, or €6.8 million.
In a statement, Galp asserts it has “demonstrated full willingness to comply with all tax obligations and to find a way to reach an understanding” and adds that “resorting to legal mechanisms, both national and international, is a step the company feels compelled to take, though it has always sought to avoid it by prioritizing constructive dialogue with Mozambican authorities to clarify the matter.”
Area 4 is operated by Mozambique Rovuma Venture (MRV), a joint venture owned by ExxonMobil, Eni, and CNPC (China), which holds a 70% stake in the concession contract.
Galp (until this year), Kogas (South Korea), and ENH – Empresa Nacional de Hidrocarbonetos (Mozambique) each hold a 10% stake.
Last week, the oil company Eni signed the Final Investment Decision with Mozambique, marking the last and crucial stage in developing energy megaprojects, for the second gas platform in the Rovuma basin, Coral North, amounting to $7.2 billion (€6.2 billion).
Mozambique expects to collect $23 billion (€20.1 billion) over 30 years from the Coral North project, the second FNLG platform by Eni for Liquefied Natural Gas production in the Rovuma basin, Cabo Delgado.
