A ministerial group headed by home minister Amit Shah has given its nod to Bharat Petroleum Corporation’s (BPCL) plan to invest $2.2-2.4 billion in the Rovuma Offshore Area-1 gas field in Mozambique. The group — including finance minister Nirmala Sitharaman, commerce and railway minister Piyush Goyal, external affairs minister S Jaishankar and petroleum and steel minister Dharmendra Pradhan — had met on June 4 to scrutinise the investment plan, as it is still to be approved by the Cabinet Committee on Economic Affairs (CCEA).
The approval was required as Anadarko Petroleum, the US-based project operator, will be announcing the final investment decision on the LNG project on June 18 during the Africa-US Business Summit 2019, which is also being held in Mozambique. Two more Indian firms — ONGC Videsh (OVL) and Oil India (OIL) — have stakes in the gas field where 75 trillion cubic feet of natural gas has been discovered. In 2013, OVL bought Videocon’s 10% stake in the project for $2.475 billion and a similar stake from Anadarko for $2.64 billion. Later, OVL gave 4% of its stake to OIL.
“While the investment plans of OVL and OIL had CCEA’s approval, BPCL’s investment plan is still to be approved by CCEA. That is the reason the meeting was called,” a source said, adding that the approval process was held up due to the Model Code of Conduct during the general elections.
OVL already has approval to invest up to $7 billion in the gas field. BPCL paid $703 million to buy the 10% stake in the project. The three Indian companies will be investing around $6 billion in all for their 30% stake in the project. For BPCL’s $2.2-2.4 billion investment, $800 million would be equity and the rest would be raised as debt.
“Once the FID is announced, the companies will take a call on further investments and they have already sought approvals for more investments,” said the source, adding that after the FID is announced, production will start which will require more investment.
Partners in the Rovuma project will be investing a total of $22-24 billion to develop the field and build two LNG trains of 12.88 million tonne to sell gas to overseas consumers. While Anadarko Petroleum holds 26.5% in the project, other partners include ENH Rovuma Area (15%), Mitsui E&P Mozambique Area1 (20%) and PTTEP Mozambique Area 1 (8.5%).