Mozambique said Exxon Mobil Corp.’s acquisition of a 25 percent stake in an offshore gas block from Eni SpA will generate capital gains revenue of $350 million.

The government expects only to receive payment when the transaction is concluded, Anibal Balango, an official in Mozambique’s tax authority, told reporters in the capital, Maputo, on Tuesday.

As a non-resident company, Eni was only eligible to pay tax on half the value of the $2.8 billion deal with Exxon. That value was further reduced to $1.1 billion after existing investments by the Italian company were accounted for, giving a tax rate of about 32 percent, the authority said.

The tax windfall from the Exxon deal, announced on March 9, comes as Mozambique grapples with a debt crisis. The government defaulted earlier this year on an interest payment for $727 million of Eurobonds after funds to buy tuna fishing boats were diverted to defense spending. International donors suspended aid after the disclosure of hidden borrowing by two state-owned companies.

The acquisition gives momentum to one of the world’s largest liquefied natural gas projects, and follows BP Plc’s October announcement that it will buy all production from Eni’s Coral South Floating LNG plant over a period of 20 years. The concession, where Eni discovered gas in 2011, includes both the Coral and Mamba gas fields, with reserves estimated at 85 trillion cubic feet.

Source: Bloomberg

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