The recent informal ministerial group meeting in India, one of the highest decision making authorities in the country, to review the state-run Bharat Petroleum Corp Ltd’s $2.2-2.4 billion investment proposal in a giant gas field in Mozambique assumes importance. Many feel that this could be a major policy plank for India to reposition in Africa, apart from making a step forward towards energy security. The review was a prelude to the investment proposal going to the Cabinet Committee on Economic Affairs (CCEA) for formal approval.
There is a backdrop to the unfolding story. The Indian public sector firms spent close to US$ 6 billion to take 30 percent stake in the Rovuma Offshore Area-1 in Mozambique during the rule of the earlier government led by Dr. Manmohan Singh. That time there was a criticism that falling oil and gas prices did not justify such a huge investment. The present government wants to steer clear of such criticisms since it may have some economic and political backlash, as the investments involved is huge and nobody can guarantee the swings in oil prices.
Close to trillion cubic feet of natural gas has been discovered in the Rovuma Offshore Area. The same will be, in phases, converted into liquefied natural gas (LNG) for sale to overseas customers in ships. Some reports making rounds about the outcome of the ministerial meeting suggests that in the first phase, partners in Mozambique project will develop the field and build two LNG trains of 12.88 million tonnes. Importantly, BPCL holds 10 percent stake in the project. In absolute terms, its share of investment comes to US$ 2.4 billion. Of this, US$ 800 million would be as equity and the remaining would be raised as debt. The project once finalized will be placed before the Cabinet Committee for implementation.
According to some reports, BPCL had paid US$ 703 million to buy the 10 percent stake in Rovuma Offshore Area-1 concession in the Cabo Delgado province in northern Mozambique. ONGC Videsh Ltd had in 2013 bought Videocon’s 10 percent stake in the project for US$ 2.475 billion and a similar stake from project operator Anadarko of US for US$ 2.64 billion. It later gave 4 percent out of this to Oil India Ltd. All the three Indian firms involved in the project feel that the project is viable and they along with other partners in the project have sold as much as 9.5 million tonnes of LNG out of the initial production of 12.88 million tonnes. Two additional sale agreements are in the final stages of execution. When executed, it would bring the total volume to more than 11 million tonnes.
Mozambique government has approved the development plan for Golfinho-Atum a natural gas field in Rovuma offshore basin, in which ONGC Videsh Ltd (OVL), Oil India Ltd (OIL), and Bharat PetroResources Limited (BPRL) have a stake. This paves a way for further investment into the natural gas field of southern African nation. The Indian companies are said to have invested over $6.5 billion into the project so far.
The Golfinho-Atum project will be Mozambique’s first onshore Liquefied natural gas (LNG) development. The plan outlines the integrated development of the Golfinho-Atum field through an initial two-train onshore liquefaction plant with a total processing capacity of 12.88 Million Metric Tonne Per Annum (MMTPA). This foundational project paves the way for a significant future expansion of up to 50 MMTPA from Offshore Area 1. The project is expected to supply initial volumes of approximately 100 million cubic feet of natural gas per day, for domestic sales in Mozambique.
