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India greenlights Bharat Petroleum’s

Mozambique LNG plans, but with a caveat

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

P8 www. NEWSBASE .com Week 40 07•October•2020