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DMEA LNG DMEA

India greenlights Bharat’s Mozambique

LNG plans, but with a caveat

INDIA INDIA’S government has reportedly authorised
a Bharat Petroleum Corporation Ltd (BPCL)
India’s government has subsidiary to proceed with investment in the
reportedly authorised Mozambique LNG project, despite lingering
a Bharat Petroleum questions about the company’s decision to
Corporation Ltd (BPCL) buy a stake of less than 20% in the French-led
subsidiary to proceed consortium.
with investment in Sources told PTI last week that New Delhi
the Mozambique had given Bharat PetroResources Ltd (BPRL),
LNG project, despite the upstream affiliate of BPCL, a green light to
lingering questions move forward with the project, which calls for
about the company’s extracting natural gas from Area 1, located off-
past decisions. shore Mozambique, and using it as feedstock
for an LNG plant. As a result, they said, BPRL
is now clear to contribute its share of funding to connection with the financing of the Mozam-
Mozambique LNG, which is expected to carry a bique LNG stake purchase.
price tag of $24bn. As of press time, neither BPRL nor its parent
They also noted, though, that India’s Central company BPCL had commented on the CBI’s
Bureau of Investigation (CBI) intended to look concerns – or on New Delhi’s decision to approve
into alleged irregularities in BPRL’s acquisition its investment in Mozambique LNG.
of its 10% stake in the consortium in 2008. The
bureau will examine the question of why the Long-term LNG supply deal
company did not accept an offer from Anadarko BPCL recently confirmed that it had signed a
Petroleum (US) to buy 20%, they said. CBI offi- long-term supply deal with Mozambique LNG.
cials are also seeking to determine why BPRL did Late last month, the company’s CEO, Neelakan-
not team up with other state-run Indian firms tapillai Vijayagopal, told reporters that the con-
such as ONGC Videsh Ltd (OVL) in order to sortium would be delivering at least 1mn tonnes
share the risk involved in taking a larger stake, per year (tpy) of LNG to BPCL over a period of
they added. 15 years. Shipments will begin after Mozam-
bique LNG’s first train comes on stream in 2024,
Questions about Videocon he said.
Indian authorities appear to have reservations Vijayagopal described the deal as advanta-
about the role Videocon, an Indian manufac- geous on several fronts. “We have a total require-
turer of televisions and other durable consumer ment of [more than] 1mn tpy of gas as of now,
goods with no experience in the oil and gas sec- and we plan to grow it to 2mn tpy this year. The
tor, has played in the Mozambique project. 1mn tpy gas we will get from Mozambique will
When BPRL opted to buy only half of the be very beneficial for us,” he said. “Also, since our
20% stake offered by Anadarko in 2008, Video- contract with Qatar will [be] over in 2027, it will
con bought the other 10% and then sold the stake help to compensate for that. Logistics-wise also,
on to OVL for $2.475bn in 2013. (OVL later sold it is closer to other locations, as it is just across the
4% to state-owned Oil India Ltd, or OIL.) Vid- Indian Ocean.”
eocon also agreed to team up with BPRL to buy Mozambique LNG is led by the French major
into a Brazilian project led by EnCana (Canada) Total, whose subsidiary Total E&P Mozambique
around the same time. Area 1 has a 26.5% stake in the consortium. The
Both moves led observers to express concerns remaining equity in the group is split between
about the ties between BPRL and Videocon. two Japanese companies, Mitsui and Japan Oil,
With respect to Mozambique LNG, industry Gas and Metals National Corp. (JOGMEC), with
analysts pointed out that OVL might not have 20%; BPRL, with 15%; Beas Rovuma Energy
had to pay so much for its stake if it had been Mozambique, a 60:40 joint venture between OVL
allowed to join the project earlier, when global and OIL, with 10%; Mozambique’s national oil
oil and gas prices were lower. As for the Brazilian company (NOC) ENH, with 10%; and PTTEP
field, experts questioned the BPCL subsidiary’s (Thailand), with 8.5%.
willingness to partner with a company that was The partners are building a gas liquefaction
new to oil and gas. plant on the Afungi Peninsula. This onshore
Eventually, India’s Ministry of Petroleum and facility will process natural gas from Area 1,
Natural Gas lodged a complaint against Video- which lies offshore in the Rovuma Basin, and
con. In June of this year, CBI responded to the turn out 12.88mn tpy of LNG. It will eventually
ministry’s complaint by charging the company’s have two production trains, each with a capacity
CEO, Venugopal Dhoot, with corruption in of 6.44mn tpy. ™

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