Galp Files ICSID Arbitration Against Mozambique Over €162 Million Tax Dispute
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TL;DR
- Galp (Portugal) filed ICSID arbitration against Mozambique.
- Dispute concerns €162 million capital gains tax on sale of a Rovuma Basin stake.
- Arbitration follows failed negotiations after a 2024 transaction.
- Case outcome may affect a pending $400 million payment related to the Rovuma LNG project.
Overview
Portugal's Galp has initiated arbitration proceedings at the ICSID against Mozambique regarding a €162 million capital gains tax resulting from the sale of its 10% stake in the Rovuma Basin to an ADNOC subsidiary. The dispute escalated after negotiations failed and could impact further project payments.
What Happened
In March 2024, Galp sold its 10% interest in Mozambique's Rovuma Basin (Area 4) for approximately $881 million to XRG, a subsidiary of Abu Dhabi National Oil Company (ADNOC).
Following this sale, Mozambique's tax authority assessed Galp a €162 million (about $175 million) capital gains tax, applying a 17.6% rate from the national petroleum tax regime.
Galp disputes the assessment, arguing that appropriate taxes were already included in the transaction deal.
On October 7, 2025, Galp notified Mozambique of its intent to arbitrate, triggering a negotiation period which ended without a settlement.
Galp formally filed for arbitration at the International Centre for Settlement of Investment Disputes (ICSID) in late June 2026, according to registration noted by Reuters.
The arbitration may affect the timeline and fulfillment of a separate $400 million payment, which Galp expects from ADNOC if the Rovuma LNG project formally launches.
Context
The dispute highlights broader concerns over tax treatment of cross-border investments and asset sales in the energy sector. Mozambique's legal stance is described by local analysts as consistent with measures to prevent tax base erosion.
Legal costs for Mozambique to participate in the arbitration could reach up to $8 million. ICSID arbitration proceedings reportedly last nearly five years on average.
Why It Matters
- The outcome will influence the financial exposure for Galp and potentially impact the Rovuma LNG project's investment timeline.
- The arbitration may set a reference for how Mozambique applies its petroleum tax regime to similar foreign investment transactions.