Mozambique gas project of OVL, OIL ties up $14.9 billion debt

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Published: July 16, 2020 3:58 PM

ONGC Videsh Ltd (OVL), the overseas investment arm of state-owned Oil and Natural Gas Corp (ONGC), holds 16 per cent stake in Area-1, while Bharat Petroleum Corp Ltd (BPCL) has 10 per cent. Oil India Ltd has 4 per cent interest.

ONGC Videsh Ltd (OVL), the overseas investment arm of state-owned Oil and Natural Gas Corp (ONGC), holds 16 per cent stake in Area-1.

Indian state-owned energy firms OVL and OIL and their foreign partners have secured USD 14.9 billion debt to part-finance their USD 24.1 billion liquefied natural gas (LNG) project in Mozambique. Led by French energy giant Total, the project envisages producing 12.88 million tonnes per annum of LNG from gas discovered in Area-1, offshore Mozambique.

Oil India Ltd, a national oil company of India, announces that Rovuma Offshore Area 1 consortium (Area-1), led by Total confirms, the finalization of the Mozambique LNG senior debt financing of USD 14.9 billion for the two train LNG project on July 15, 2020,” the company said in a regulatory filing on Thursday.

Indian firms hold a total of 30 per cent stake in Area-1, which has around 75 trillion cubic feet of recoverable gas resource. The consortium operating Area-1 had approved the final investment decision (FID) on June 18, 2019, Oil India Ltd (OIL) said. The total cost is estimated at USD 24.1 billion and is to be funded through a combination of debt (USD 15.8 billion), equity (USD 7.4 billion) and cash flow from operations (USD 0.8 billion).

The senior debt financing comprises a loan facility with the African Development Bank, loans from commercial banks and credit from other financing institutions, OIL said, adding the project expects to achieve financial closure in the fourth quarter of this year. The project entails designing, building and operating an integrated Liquefied Natural Gas (LNG) plant, including offshore extraction, underwater pipeline, onshore processing plant, as well as ancillary support facilities.

It will have a capacity of 12.88 million tonnes per annum of LNG and will source gas from the Golfinho-Atum (GA) field within Area-1, which is located 40 kms off the coast of Mozambique. The project will supply gas for LNG exports (mainly to Europe and Asia) and domestic consumption.

ONGC Videsh Ltd (OVL), the overseas investment arm of state-owned Oil and Natural Gas Corp (ONGC), holds 16 per cent stake in Area-1, while Bharat Petroleum Corp Ltd (BPCL) has 10 per cent. Oil India Ltd has 4 per cent interest.

Total is the operator of the project with 26.5 per cent stake while Mitsui of Japan has 20 per cent. PTT Exploration of Thailand holds 8.5 per cent and Mozambique’s oil and gas company, ENH the remaining 15 per cent of shares in the project.

As much as 11.14 million tonnes per annum of LNG, or 86 per cent of production capacity, has already been sold to offtakers from Japan, India, China, the Netherlands, Indonesia, and France. The Area-1 project is expected to start in 2024 and reach full production by 2025.

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