BPCL arm puts off first gas output from Mozambique by two years
Mumbai: The first gas output from Mozambique’s Rovuma basin will take longer to be produced than anticipated. Bharat PetroResources Ltd (BPRL), the upstream arm of state-owned Bharat Petroleum Corp. Ltd (BPCL), said the gas will now be produced in 2020-21 instead of year 2019.
Capital expenditure for the basin is undergoing revision, thanks to the drop in crude oil prices and a subsequent drop in exploration service costs. The previously projected capital expenditure for the project was at $21 billion.
“The capex is undergoing revision and we will have more details on this by next year. Legal compliance and framework is very important for us at this point 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. The project will have 60% debt and the rest as equity from partners,” said S. Varadarajan, chairman and managing director, BPCL, at a press conference in Mumbai on Wednesday.
Exploration service costs are down 20-30% in the wake of drop in crude oil prices. Over the last two years, crude oil prices are down over 53%.
BPRL, through its overseas subsidiary company, holds 10% interest in the block. The other consortium members in the block are Anadarko (26.5%) (Operator of the block), Beas Rovuma Energy Mozambique Ltd (10%), ONGC Videsh Ltd (10%), PTTEP (8.5%) and Mitsui E&P Mozambique Area 1 Ltd (20%). The balance 15% is with Empresa Nacional de Hidrocarbonetos E.P (ENH), the national oil company of Mozambique.
Mozambique has approximately 75 trillion cubic feet (tcf) of recoverable natural gas resource.
The consortium is planning two trains of 6 million metric tonnes per annum (onshore liquefaction trains) post production.
BPCL in its annual report said that for early monetization of the project, the consortium is working concurrently on three processes. The first is negotiations with the government on a legal and contractual framework that would provide stability to the project throughout its life.
Second, the consortium is making steady progress to secure long-term sale purchase agreements for 8 million metric tonnes per annum of LNG with premium Asian buyers and third, the consortium is progressing project financing debt of approximately two-third of the total capital required.
“To date, 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,” BPCL added.