Maputo — The Mozambican government on Tuesday authorised a contract for oil prospection in the central province of Sofala. The concession was awarded to the South African company SASOL and the Mozambican state-owned Empresa Nacional de Hidrocarbonetos (ENH) - which has a fifteen per cent stake.

Under the contract, the two companies will search for natural gas and petroleum in the Mozambique Basin, with SASOL investing 25.3 million US dollars.

According to Deputy Minister of Justice Alberto Nkutumula, the contract is valid for eight years divided into three phases. The first phase lasts three years and will see an investment of 10.3 million dollars. The second phase covers two years requiring an investment of five million dollars. The final phase is over three years and will need 10 million dollars of investment.

Nkutumula said that if oil is discovered in marketable quantities a 30-year contract would be awarded.

Currently, various companies are involved in prospecting for hydrocarbons in Mozambique, particularly in the Rovuma Basin in the north of the country, where the US company Anadarko recently announced the discovery of oil. SASOL operates the Pande natural gas field in the southern province of Inhambane.

The Council of Ministers also approved environmental regulations for oil companies, which define the procedures for evaluating the environmental impact resulting from their operations and measures to protect the environment. The regulations impose heavy fines for infractions on environmental standards.

According to Nkutumula, these regulations are necessary to protect the environment and promote a fairer and more efficient management of resources in the context of the country registering an increase in hydrocarbon operations in recent years.

Other issues tackled by the Council of Ministers include the banning of asbestos and its derivatives. The government has decided to ban the production, use, importation and exportation of asbestos, along with the sale of its derivatives to protect public health and the environment, with fixed penalties of 600,000 meticais for each infraction of these regulations.