Mozambique: Approval of the New Petroleum Law

The New Petroleum Law widens the object and scope of the legal regime, by:

1. expressly including operations for Carbon Capture, Utilization and Storage (CCUS), as well as the control of greenhouse gas emissions, whenever associated with petroleum operations, bringing the Mozambican legal framework closer to global energy transition trends;
2. expressly covering the use or consumption of petroleum, where such use constitutes an integral part of production operations or transport at a pressure above 16 bar.

The New Petroleum Law reaffirms and deepens the State’s ownership of petroleum resources, providing that:

1. the State maintains control over all activities of prospecting, exploration, development, production, transport, marketing, refining and processing of hydrocarbons, liquid, gaseous and their derivatives, including petrochemicals, LNG and GTL, extended to non‑conventional hydrocarbons and CCUS, thereby assuming a broader role in the management and supervision of the sector;
2. the State must adopt policies and measures that encourage investment, ensuring legal predictability, fiscal stability, regulatory transparency and environmental protection.

In the area of just compensation for local communities and other holders of pre existing rights, the New Petroleum Law changes the procedural model, by:

1. replacing the regime based on memorandum of understanding, of non binding nature, with the conclusion of binding agreements between the concessionaire and holders of pre existing rights or affected local communities;
2. providing that such agreements may be witnessed by the Government and by community based organisations, if so, requested by any of the parties;
3. assigning to the Government responsibility for ensuring the best possible terms and conditions of the agreement in favour of the communities, including the payment of just compensation, in accordance with the applicable legislation.

The New Petroleum Law strengthens local content requirements in human resources management, by providing that concessionaires:

1. must include workforce and training plans in their Local Content Plans, ensuring the recruitment, training and progressive promotion of Mozambican citizens;
2. must identify, at each stage of operations, the foreign workers to be recruited;
3. must promote the gradual increase in the number of Mozambicans involved in petroleum operations, in accordance with specific local content legislation.

In the area of national entrepreneurship, the New Petroleum Law seeks to reinforce the participation of national operators by providing that the strategy of the licences of Areas may reserve blocks exclusively dedicated to operations by national operators with the required technical and financial capacity and determining that the Government must ensure the participation of national companies in the acquisition of exploration and production areas which have been the subject of prior rights that have expired.

Among the pre existing general duties, concessionaires are now subject to specific duties, including:

1. specific obligations regarding human rights, in particular the adoption of corporate social responsibility practices that respect those rights;
2. the submission of periodic reports on the observance of human rights to the competent authorities;
3. the obligation to allow independent monitoring of the human rights situation in the area where petroleum operations are carried out.

The reconnaissance activity, previously carried out under a reconnaissance concession contract, will now be carried out exclusively by national companies, through a licence to be granted upon approval by the Council of Ministers, for the performance of preliminary prospecting works in the authorised area.

State participation in petroleum operations is substantially reinforced through the establishment of a minimum 15% participating interest in petroleum and gas projects, on a free carry basis, and the creation of a financing mechanism under which the other concessionaires bear the costs of the State’s additional participation, up to a maximum of 40% participating interest and up to the start of production, while simultaneously reinforcing the role of ENH as the State’s exclusive representative and mandatory partner of any investor at all stages of petroleum operations.

The New Petroleum Law strengthens the role of the INP as the Petroleum Regulatory Authority, granting it broad powers in cost recovery, measurement and control of production data and verification of measurement systems, as well as new competences in licensing, budget approval and supervision of petroleum operations, supported by own revenues and greater financial and institutional robustness..

The New Petroleum Law extends the scope of natural gas projects to cover not only liquefaction, but also regasification, onshore or offshore, within projects for the design, construction, financing, operation and sale of natural gas for the domestic market and for export, allowing entities other than concessionaires to be authorised to develop natural gas liquefaction and regasification projects.

The New Petroleum Law reinforces that, in the approved Development Plan, a minimum quota of 25% of petroleum and gas, including in the form of Liquefied Natural Gas (LNG), must be allocated to the domestic market, exclusively for domestic consumption. It further provides that the price of petroleum and gas for the domestic market must be adjustable and lower than international market prices and ensures that 100% of condensate is allocated to national development.

The New Petroleum Law strengthens the position of national entrepreneurship in the context of unitisation, by providing that:

1. where a deposit lies between a concession area and an area that has not yet been concessioned, such non‑concessioned area shall be allocated to the State’s exclusive representative (ENH, E.P.), which will enter into the unitisation agreement with the already‑concessioned area;
2. if ENH intends to assign part of its participating interest in that area, preference must be given to national companies;
3. specific rules shall be introduced for unitisation with neighbouring countries, requiring Government approval of a negotiation strategy based on a common Master Production Plan.

The New Petroleum Law strengthens the obligations applicable to the conduct of petroleum operations, in particular by:

1. requiring the holder to submit to the Regulatory Authority the Procurement Plan approved under the Local Content Law;
2. creating a retention fee over the Development and Production Area and providing that, if the retention exceeds one year from the start of payment of the fee, the area excluded from development shall revert to the State.

The New Petroleum Law establishes a specific regime for offshore petroleum infrastructure, requiring that fixed or floating infrastructure be designed and equipped so as to ensure stability and safe operation, in line with best industry practices and acceptable maritime standards, and further providing that, for registration purposes, such infrastructure is not treated as maritime vessels.

A specific force majeure regime has been introduced, defining such events and establishing that each party shall bear its own costs, and that the State shall not be required to compensate or reimburse the concessionaire. It further provides that events lasting more than one year will require the contract to be reassessed by the Government and the concessionaire, and that concession contracts must set out the force majeure events and their effects, including the exclusion of any financial burden on the State.

The New Petroleum Law preserves vested rights arising under concession contracts and other agreements currently in force that were entered into under the previous petroleum legislation (Law No. 3/2001 of 21 February and Law No. 21/2014 of 18 August). However, it provides that matters considered to be of public interest – including economic sovereignty, national defence and security, energy security, transparency, regulation and supervision, environmental protection, public health and human rights – shall be governed by the provisions of the New Petroleum Law, even in respect of existing contracts. The law further provides that any amendments, extensions, addendums or other modifications to existing contracts will be subject to the provisions of the New Petroleum Law.

The New Petroleum Law entered into force on 3 June 2026.