ONGC Videsh Ltd (OVL) on Wednesday said a force majeure at its $20-billion Mozambique LNG venture has been lifted, setting the stage for resuming construction work. The force majeure was imposed in 2021 after the project came under attack by Islamic State terrorists.
The development gains significance as the project is expected to ease the supply of LNG to India and enhance energy security.
A consortium of Indian state-run companies holds a total of 30% in the TotalEnergies-operated LNG project. OVL holds 16%, BPRL Ventures Mozambique BV—a subsidiary of BPCL—holds 10% and Oil India Ltd owns 4%.
Total E&P Mozambique Area 1 Limitada, a subsidiary of TotalEnergies, holds 26.5% in the plant and is its operator. OVL holds 16% interest in the Area 1 concession through its subsidiaries ONGC Videsh Rovuma Ltd (OVRL) and Beas Rovuma Energy Mozambique Ltd (BREML).
In a statement, the overseas arm of state-run ONGC said that the security situation in Cabo Delgado Province (CDP), north of Mozambique, Area 1 Mozambique LNG Project has significantly improved, and Area 1 Mozambique LNG consortium has accordingly notified the government of Mozambique to end the force majeure declared on 11 May, 2021.
“Withdrawal of the Force Majeure enables construction activities to restart for early completion of the project,” it said. Operations at the Offshore Area 1 project in the coastal town of Palma had started in 2019, were suspended after the force majeure.
In August, the chairman and managing director of Bharat Petroleum Corp. Ltd (BPCL) Sanjay Khanna had said that it has secured rights to market LNG from the long-stalled project. Addressing the state-owned company’s annual general meeting, the CMD said: “While security concerns had delayed the project, conditions have improved now, and full-scale development is expected to resume soon,” Khanna said.
“Once operational, the two-train LNG project will boost our upstream presence and support the energy transition. We have already secured LNG marketing rights in line with our 10% participating interest,” he added.
The move comes at a time when India has been making efforts to ensure energy security amid a volatile geopolitical situation. India, which imports about 55% of its natural gas requirement, seeks to increase the share of gas in its total energy mix to 15% by 2030 from the current 6%.
The project would also make LNG supplies more accessible for India. Supplies from Mozambique reach India three to seven days by sea, making it a better option than several other suppliers. LNG supplies from the US, a major supplier of LNG to India take about 25-50 days to reach India.
With the expansion of city gas distribution networks, India’s demand for natural gas is expected to grow further. An IEA report published in February this year projected India’s natural gas demand to increase by nearly 60% by 2030, putting India’s projected gas demand on a par with some of the world’s largest consumers.
