With the law and order situation improving considerably, Bharat Petroleum Corporation’s (BPCL’s) 12.88 million tonne per annum (mtpa) Mozambique LNG project should take off in the first half of next year, BPCL said on Monday. BPCL has 10% stake in the project and has a 15-year term contract for 1 million tonne (mt) of LNG.

While construction activities to develop the initial two trains of the LNG project in Mozambique were progressing as per schedule, security incidents during March-end 2021 in the Cabo Delgado province in Northern Mozambique led the operator (Total) to withdraw all project personnel from the site and declare force majeure for the project.

“Now, with the efforts of the Government of Mozambique’s forces, supported by a regional coalition, progress is being made in improving the security situation in the region, and the project will resume once the security situation is stabilised in a sustainable manner,” BPCL CMD Arun Kumar Singh told shareholders of the company in the company’s annual general meeting.

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Singh said that the company was hopeful that the project should take off from the first half of 2023. Since India imports around half of its LNG needs to meet domestic demand, the operationalisation of the unit would help.

Apart from BPCL, state-owned ONGC and Indian Oil Corporation (IOC) also have 10% stake each in the multi-billion-dollar natural gas development project off the coast of Northern Mozambique. Total has a 26.5% stake, alongside Mozambique’s state-owned ENH, which has 15%, Japan’s Mitsui and Jogmec have 10% each and Thailand’s PTT has 8.5%.

Singh said that BPCL will also invest $1.6 billion in the BM-SEAL 11 concession in Brazil. While BPCL holds 40% participatory interest in the project, the remaining is with state-owned Petrobras. The project is likely to start production in 2026-27. The company has already invested $1 billion in exploration in the project.

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BPCL recently said it plans to invest Rs 1.4 trillion in the next five years in six “strategic” areas, including gas, renewable and e-mobility, aimed at diversifying and creating additional revenue streams that will hedge it against any future decline in the liquid fuel business.

The state-owned oil marketing company, which recorded a Rs 6,291-crore loss in the first quarter, mainly on marketing losses, said the current quarter should not be as bad as the first quarter, as things are improving.

“We have responsibility towards our people. This also stems from the fact that we can absorb some losses and ultimately with the hope that we will make up such losses when the good time comes. If you look at the oil companies, it is always a see-saw game,” Singh said.

Stating that this is just a temporary phase, as the oil price should come down (Singh earlier predicted $90/barrel), he said that if the prices really do not come down, “then definitely we will take some steps in consultation with all stakeholders to make sure that we remain financially comfortable. So, it is just a matter of a few months; the first quarter is bad, the second quarter is not as bad as the first quarter. Things are improving.”

Meanwhile, Singh said that oil marketing companies are in dialogue with different suppliers, including those in Russia, for entering into long-term sourcing of oil. Russia has been supplying crude to India at a discount and a term deal would help in ensuring cheap supplies.