Millennium Post

Gas diplomacy: Pradhan to visit Mozambique

The southern African nation’s council of ministers had in December last year approved a decree law that allowed companies to develop offshore gas discoveries and set up plants to turn the fuel into liquid (LNG) for exports.

The law however requires ratification of the Mozambique Parliament and Pradhan plans to visit the capital Maputo next month to impress upon the government to pass the law at the earliest, sources privy to the development said.

This will be the first major diplomatic exercise overseas that is being undertaken by Pradhan since he became the oil minister.

The Rovuma Area-1, where Indian firms hold a total of 30 per cent stake, has an estimated 75 Trillion cubic feet (Tcf) of recoverable reserves. By the virtue of their stake, ONGC Videsh Ltd, Bharat Petroleum Corp Ltd (BPCL) and Oil India Ltd are entitled to more than 22 Tcf of these, nearly three times the reserves at India’s biggest gas field in offshore basin operated by ONGC that holds close to 8 tcf; or 16 times the reserves at Reliance Industries’ eastern offshore KG-D6 block.

Sources said the decree law provides for legal and fiscal framework for 30-year exploration and production period. It provides for the consortium to not just recover the cost of development of the field but also that of the LNG plant from sale of gas before sharing profits with the government.

An estimated $18.4 billion will be required to bring the first set of discoveries to production and convert gas into liquid (liquefied natural gas or LNG) for ease of shipping to consuming nations such as India.

The Area-1 consortium is focused in looking at bringing first gas by 2019, they said. OVL holds 16 per cent stake in the offshore Rovuma Area 1, Oil India Ltd has a 4 per cent stake and a unit of BPCL owns 10 per cent in the block. Woodlands, Texas-based energy-exploration firm Anadarko holds 26.5 per cent in the block. Other partners in Area-1 include Mitsui with a 20 per cent stake, ENH (15 per cent) and PTTEP (8.5 per cent).

So far, seven gas fields have been discovered in the block. Of these, three fields - Lagosta,
Windjammer and Barquentine (collectively called the Prosperidade field) - extend into the adjacent Block Area-4 where Italy’s ENI with a 70 per stake is the operator.
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