With ONGC lining up $3 billion more investment in a giant Mozambique gas field, the government on Friday pressed the African nation to approve a law that will help protect its investment.
ONGC Videsh Ltd, the overseas arm of state explorer Oil and Natural Gas Corp (ONGC), and Oil India Ltd (OIL) have already spent $5 billion in taking 20 per cent stake in Area-1 gas field.
Their share of investment for developing the offshore gas field and converting the fuel into LNG for export in ships would be another $3 billion-plus.
Though the required law and investment agreements are in place for the Production Sharing Contract (PSC) for the upstream component, the special regimes required for midstream and downstream investment (pipelines and LNG plants) are yet to be finalised, sources privy to the development said.
The special regimes for midstream and downstream investment require passing of a decree law and an LNG investment agreement with the approval of the Parliament of Mozambique. While the Mozambique cabinet has approved the decree law, it is awaiting Parliament nod, sources said.
Oil Minister Dharmendra Pradhan on Friday pressed visting Mozambique Foreign Minister Oldemiro Julio Marques Baloi for early passage of the law.
Any delay in the Parliament nod will push back the project as Mozambique is headed for general elections and a new Parliament may take sometime to constitute and approve the decree.
This, they said, may result in erosion in the value of project. Sources said OVL and partners are targeting 2019 for start of gas production. An official statement said Pradhan and the visiting minister discussed various areas of mutual cooperation in the energy sector.
Pradhan said both countries have traditional links which have grown from strength to strength over the years, it said.
During the meeting, an MoU was signed between India and Mozambique on cooperation in the field of oil and gas for five years. The objective of the MoU is to enhance bilateral cooperation on the basis of equality and mutual benefit, the statement said. US energy firm Anadarko Petroleum Corp is the operator of Area-1 or Rovuma-1 project.
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