Gas production from the Rovuma Basin in Mozambique will take longer than expected and Bharat Petroleum Corporation now expects natural gas to flow out from 2020-21 instead of 2019.
Bharat Petro Resources (BPRL), which is the upstream arm of BPCL, owns 10 per cent in the field and the parent is also not averse to entering into a purchase agreement with the Rovuma Basin operator Anadarko to buy gas provided it offers the right price.
The state-run BPCL owns 10 per cent equity in the gas field in the East African nation, which when found in 2010 was the largest gas find in the world. Mozambique has around 75 trillion cubic feet (tcf) of known natural gas reserves.
The company is also reworking the capex for the gas basin, following the massive drop in crude prices and a subsequent drop in exploration service costs. The previously projected capital expenditure for the project was at USD 21 billion.
“We hope gas production to begin from 2020-21 and not 2018-19 as originally expected due to the delays. We are also hopeful that we will be able to finalise our final investment plans by early next year once the government clears it,” the outgoing BPCL CMD S Varadarajan told a press conference here.
He further said the capex is also undergoing revision and we will have more details on this by next year. “Legal compliance and framework is very important for us now before there is a final investment agreement on the field. We are hoping that sometime early next year we will have a final investment decision for this project,” he said yesterday after the AGM.
“The project will have 60 per cent debt and the rest as equity from partners,” Varadarajan said, adding the company can comfortably raise so much debt.
It can be noted that exploration service costs are down 20-30 per cent following the fall in crude prices since the summer of 2014. Since then crude prices are down around 54 per cent and has been trading around USD 50 a barrel.
BPRL holds 10 per cent interest in the Rovuma Basin fields. The other consortium members are Anadarko (26.5 per cent, which is also the operator of the block, Beas Rovuma Energy Mozambique, and ONGC Videsh (10 per cent each), PTTEP (8.5 per cent), Mitsui E&P Mozambique Area 1 (20 per cent) and the national oil company of Mozambique–Empresa Nacional de Hidrocarbonetos EP, holds the reaming 15 per cent in the Rovuma Basin.
Varadarajan said the consortium is planning two trains of 6 million metric tonne per annum (onshore liquefaction trains) post-production.
For early monetisation of the gas project, the consortium is working on three processes-talking to the government on a legal and contractual framework to ensure stability to the project throughout its life, securing long-term sale purchase agreements for 8 mmt per annum of LNG with premium Asian buyers and finally, the securing project finance of around two-thirds of the total capital required, the BPCL CMD said.
“The consortium has made considerable progress on all these fronts. An agreement has been secured with the government of Mozambique for the land where the onshore LNG park will be located,” Varadarajan said.
He also said the company will be pumping in around Rs 1 trillion, more than half of which will go into refinery expansion, over the next five years. This year’s capex is around Rs 12,500 crore, he added.