Mozambican parliament approves new Hydrocarbon Law

Mozambique’s long awaited petroleum law has been approved by the parliament with substantial amendments by MPs who argued that the changes will strengthen the role of the Mozambican state in oil and gas exploration and production.

The bill, which will come into effect by the end of the year, was approved with votes from Frelimo and MDM. Renamo voted against the bill on the grounds the High Authority of the Extractive Industry – the body that oversees oil and gas operations - must be composed by elected members from all political parties.

The most important point in the new law is perhaps the fact that the state, through the National Hydrocarbon Company (ENH), controls the production, transport, marketing and transformation of all LNG and their derivatives.

It also states that the government must create the conditions for the involvement of Mozambican business people in the oil and gas industry. This is in response to local businesses who have been demanding a better share in the oil and gas business.

The sector is currently dominated by giant multinationals such as Anadarko and ENI and their own international service suppliers. It is very unlikely that any local company will venture into bidding for concessions of oil and gas exploration areas because they neither have the necessary expertise, nor the funds. They have, however, asked the government to introduce a special regiment that forces multinationals to contract local companies for service and products supply.

For a comprehensive analysis of Mozambique’s petroleum law, the Renamo amnesty deal - otherwise unavailable in the international press - and the political, business and security issues affecting Mozambique, please see our latest issue of Mozambique Politics and Security.

© 2014 Menas Associates

US-Egypt: strain in relations?

The US has yet to officially extend an invitation to President El-Sisi following his inauguration on 8 June, including for a US-Africa Leaders’ Summit set to take place on 5-6 August. Although President Barack Obama has called El-Sisi to congratulate him on his electoral victory, his call came days after most countries had already extended their congratulations.

Illustrating the strain in relations between the two countries, a proposed Senate foreign aid bill would cut aid to Egypt by US$400 million (Egypt currently receives approximately US$1.5 billion in annual military and economic aid). While many Western states continue to harbour reservations towards the politics of Egypt’s new leadership, we do expect that as President El-Sisi’s administration settles into office, a slow rapprochement will begin to take place.

In our visit to Washington DC last week, it is clear that there is an element of discomfort about Egypt and its seemingly one-sided political process, heavy-handed judiciary and a lack of institution building. It seems to be perceived in several institutions in Washington that Egypt’s authorities do not really care about these concerns, knowing that the US government will not cut aid substantially for years.

There is hope in Washington that there will be a political calming in Egypt but there is also a high scepticism that the body politic will not be inclusive and that figures will create a one-sided narrative that does not allow for critique. It is clear that discussions in Washington about how to engage productively with Egypt will continue for some time, with frustration with a lack of process and real engagement set to rise.

For more news and expert analysis about Egypt, please see Egypt Politics & Security.

© 2014 Menas Associates