Work On Mozambique LNG Project Likely To Start By July 2024, BPCL Ties Up 1 Million Tonnes Of Gas Supply

State-owned Bharat Petroleum Corporation Limited (BPCL) has contracted supply of 1 million tonnes (mt) of liquefied natural gas (LNG) from the upcoming $20-billion project in Mozambique.

Through its wholly-owned subsidiary Bharat PetroResources (BPRL), Bharat Petroleum Corporation, along with two other Indian PSUs — ONGC Videsh (OVL), the overseas arm of Oil and Natural Gas Corporation Limited (ONGC), and Oil India (OIL) — collectively holds a 30 per cent stake in the LNG project situated in Mozambique’s northern Cabo Delgado province.

TotalEnergies, which holds a leading 26.5 per cent stake and is the operator of the project, halted its on-ground operations on 26 April 2021, in response to attacks by militants linked to the Islamic State on civilians in Palma town in Cabo Delgado province.

Force majeure is a provision that allows parties to suspend or end contracts because of events that are beyond their control, such as wars or natural disasters.

However, with the security situation substantially improved, the force majeure is expected to be lifted around July 2024, which will enable the commencement of work on the project. Gas flow is projected to commence by FY28.

So far, the refiner has invested roughly $900 million on the development side and an additional $729 million on exploration.

Why It Matters

The Area 1 block, located in the Rovuma Basin 40 km off the coast of northern Mozambique, is among the world’s most significant discoveries in the last 20 years. It has approximately 75 trillion cubic feet of recoverable gas, implying a resource life of around 120 years at the initial production rate of 12.88 metric tonnes of LNG per year.

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.

The significance of the project is underscored by the involvement of high-ranking visits over the past year, to explore the possibility of restarting operations at the project in the southern African nation.

Foreign Minister S Jaishankar's visit to Mozambique in April 2023 was succeeded by Oil Minister H S Puri's visit to the project site in October of the same year. Additionally, Oil Secretary Pankaj Jain held discussions with Total Energies CEO Patrick Pouyanne in May 2023 regarding the resumption of operations.

Also Read: Explained: India's Vigorous Pursuit Of $20 Billion Mozambique LNG Project And Its Geopolitical Rumble