India’s Oil Ministry and French oil and gas major Total Energies held deliberations on restarting the much-awaited $20 billion liquefied natural gas (LNG) project in Mozambique.
Oil Secretary Pankaj Jain met Total Energies CEO Patrick Pouyanne last month and held discussions on resuming operations at the project in the southern African nation, which was halted in 2021 due to security concerns.
Foreign Minister S Jaishankar had also visited Mozambique in April this year as part of India’s plan to deepen trade and diplomatic ties with the African countries.
Key project for India
The project assumes importance due to logistical convenience, as Mozambique is close to India’s west coast), which has the maximum number of LNG terminals, sources said.
Besides, its geographic location positions to meet the demands of the Atlantic and Asia-Pacific markets as well as tap into the growing energy requirements of the West Asia, and India, one of the sources added.
Three Indian PSUs—ONGC Videsh (OVL), Bharat PetroResources (BPRL), and Oil India (OIL)—hold a total of 30 per cent stake in the project, which was first expected to commence operations in 2024 but has now been delayed to 2027 due to reasons such as change of ownership and security at the project site, sources said.
The project was halted in 2021 after Total Energies declared force majeure following Islamic State-linked insurgents attacking civilians in Mozambique’s northern Cabo Delgado province, where the natural gas project is coming up.
Sources said that discussions also focused on resuming operations at the offshore field development and the two LNG trains. Efforts are on to resume the project by July–August 2023. It is now expected to be fully operational by 2027.
Another issue is the escalation in investment costs. Total Energies is in discussions with the EPC contractors, and it needs to be seen whether there will be a cost escalation.
The project will restart once force majeure is lifted, which is likely to be very soon. More clarity on cost escalation matters will come in the next 2-3 months as talks progress, a source said.
A senior government official said the project was delayed due to a change of ownership from Andarko to Total.
In 2019, Total Energies acquired Anadarko Petroleum’s 26.5 per cent stake in the project for $3.9 billion. Insurgent activity in the area is another key concern.
“Currently, Total has published a humanitarian report and an action plan, which have been decided by the Mozambique LNG partners based on the recommendations of this report.
Now, a foundation will be created with a budget of around $200 million to be used for the socio-economic development of Cabo Delgado,” he added.
The Area 1 block, located in the deep-water Rovuma Basin offshore Mozambique, is one of the largest gas discoveries in offshore East Africa, with estimated recoverable resources of around 65 TCF.
It includes the development of the Golfinho and Atum fields located in Offshore Area 1 and the construction of two liquefaction trains with a total capacity of 13.1 million tons per annum (MTPA). It can be scaled up to 43 MTPA.
Total Energies EP Mozambique Area 1 holds 26.5 per cent stake alongside ENH Rovuma Área Um (15 per cent), Mitsui E&P Mozambique Area 1 (20 per cent), ONGC Videsh Rovuma (10 per cent), Beas Rovuma Energy Mozambique (10 per cent), BPRL Ventures Mozambique (10 per cent), and PTTEP Mozambique Area 1 (8.5 per cent).