ONGC Videsh expects headway in Mozambique offshore LNG project rollout

ONGC Videsh Ltd (OVL) is expecting to make headway in its offshore gas exploration project in Mozambique, where people have begun working on the ground, officials said. An investment of ₹1,500 crore has been greenlit by the OVL board earlier this week into the joint venture (JV) there.

 

The overseas arm of state-owned exploration and production giant ONGC, OVL holds a 10 per cent stake in the $20 billion “Offshore Area 1” LNG project, which has been under force majeure since April 2021 following attacks by Islamic State terrorists in Northern Mozambique's Cabo Delgado province. The revocation of the force majeure is expected soon, company officials said.

 

OVL's board approved an investment up to ₹1,500 crore in Beas Rovuma Energy Mozambique Limited (BREML), an OVL subsidiary in which it holds a 60 per cent shareholding, with the rest being owned by state-owned upstream player Oil India Limited (OIL).

 

The board also approved other related-party transactions, including the sponsoring of a senior loan up to $379.30 million by OVL Overseas IFSC Ltd (OOIL) to Moz LNG1 Financing Company Ltd (MozLNG1) for Area 1 Mozambique Project. OOIL is a wholly owned subsidiary of OVL and MozLNG1 is an associate of ONGC Videsh Rovuma Limited (OVRL), another wholly owned subsidiary of OVL. The company will also extend guarantee support to MozLNG1 against the loan, its regulatory filing said.

 

Covering 2.6 million acres, the Mozambique Rovuma Area-1 Offshore project will see integrated gas fields development and has estimated recoverable reserves of 75 trillion cubic feet of natural gas. It is a major bet for India given the relative ease of transferring LNG back across the Indian Ocean.

 

OVL holds a 10 per cent participating interest, while another 6 per cent interest is held through its 60 per cent shareholding in BREML. The Offshore Area 1 is located within the Rovuma Basin, approximately 40 km offshore northern Mozambique. Meanwhile, BPRL Ventures Mozambique BV, an overseas subsidiary of Bharat Petro Resources Ltd, a wholly owned subsidiary of BPCL, holds 10 per cent participating interest in the Area 1 concession. OIL holds a 4 per cent interest.

 

It is being developed by a consortium of French energy major Total SE (26.5 per cent), Mozambique's national oil company Empresa Nacional de Hidrocarbonetos (ENH) (15 per cent), Mitsui E&P Mozambique Area 1 (20 per cent), and PTTEP Mozambique Area 1 (8.5 per cent), a wholly owned subsidiary of Thailand's national exploration and production company. From India, OVL, BREML, and BPRL Ventures Mozambique together own 30 per cent of the project.