The East African nation of Mozambique has rejected any form of negotiation with Portuguese oil company Galp in a capital gains tax dispute linked to the sale of its oil and gas assets.
The Mozambican Tax Authority is demanding $175.9 million from Galp over the sale of the company’s stake in a gas project.
The disagreement stems from Galp’s exit from the consortium operating Area 4 of the Rovuma Basin, which it sold in March to XRG, a subsidiary of the Abu Dhabi National Oil Company (ADNOC), for $1.05 billion.
Galp heads to arbitration
In an earlier statement, Galp said it has initiated court arbitration through an International Arbitration Tribunal to resolve the dispute.
However, the Mozambican government has maintained its stance, insisting that there will be no negotiations and that it will pursue the case strictly according to the law.
“There are no negotiations. What there is, is following the law’s intentions. What are we going to negotiate? If I’m a company, I declared profits of 100 meticais, and the IRPC [tax] is 32.5%, I have to pay 32.5% to the State. And there’s no discussion.
“Now I’m negotiating to pay 10, when I should be paying 32.5? That’s how we see it from a purely economic point of view,” said Amílcar Tivane, Mozambique’s Secretary of State for the Treasury and Budget.
Tivane added that he expects a “positive outcome” from the arbitration process. According to him, it is natural for Galp to contest such a large tax bill, but the company must honour its obligations once the arbitration is concluded.
“I too, if I were CFO of that company, would dispute it. The less any company pays, the better. But we operate in a world where the expectation is that these companies, particularly those listed on stock exchanges, honour their obligations.
“If we could close this dossier without taking it to international arbitration, fine. But this was not a scenario that materialised, and we will let the AT do its job. It is acting in accordance with the law,” Tivane added.
The Rovuma Basin transaction
Galp sold its 10% stake in Area 4 of the Rovuma Basin, located in northern Mozambique, to ADNOC for about $950 million (€819 million) in March 2025.
The area is one of the country’s most promising gas zones and hosts some of Africa’s largest liquefied natural gas (LNG) developments.
The acquisition entitles ADNOC to a share of the liquefied natural gas (LNG) production from the concession, which has a combined production capacity exceeding 25 million tonnes per annum (mtpa).
Mozambique’s LNG ambitions
Area 4 includes the Coral South Floating Liquefied Natural Gas (FLNG) facility, which is already operational, as well as the upcoming Coral Norte FLNG and the planned Rovuma LNG onshore project.
Last week, Eni and its partners signed the Final Investment Decision (FID) with Mozambique for the Coral Norte project, valued at $7.2 billion.
The new FLNG platform will expand the country’s gas output and is expected to significantly boost its foreign revenue.
Mozambique’s government projects $23 billion in earnings over 30 years from Coral Norte, underscoring its increasing reliance on natural gas exports to fuel economic recovery.
The ongoing arbitration between Galp and the Mozambican State highlights the tensions between foreign investors and Mozambique’s fiscal authorities, as the country continues its push to become a major global player in liquefied natural gas production.
