ONGC Videsh Ltd (OVL) on Wednesday said force majeure at its $20 billion LNG venture in Mozambique has been lifted, paving the way for the resumption of construction work. Force Majeure was introduced in 2021 after the project came under attack by Islamic State terrorists.
The development assumes significance as the project is expected to facilitate the supply of LNG to India and increase energy security.
A consortium of Indian state-owned companies holds a total of 30% in the LNG project operated by TotalEnergies. 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% of the plant and is its operator. OVL holds a 16% interest in Area 1 concession through its subsidiaries ONGC Videsh Rovuma Ltd (OVRL) and Beas Rovuma Energy Mozambique Ltd (BREML).
In a statement, ONGC’s overseas branch said that the security situation in the Cabo Delgado Province (CDP), north of Mozambique, in the Area 1 Mozambique LNG Project has significantly improved and the Area 1 Mozambique LNG consortium has therefore notified the Government of Mozambique of the termination of the force majeure declared on 11 May 2021.
“Revocation of the force majeure intervention allows the resumption of construction activities for the early completion of the project,” it said. Operations at the Offshore Area 1 project in the coastal city of Palma began in 2019 and were suspended following force majeure.
In August, chairman and chief executive of Bharat Petroleum Corp. Ltd (BPCL) Sanjay Khanna said it has secured rights to sell LNG from the long-stalled project. Speaking at the state-owned company’s annual general meeting, the CMD said, “While security concerns have delayed the project, conditions have now improved and full development is expected to resume soon,” Khanna said.
“Once the two-train LNG project is operational, it will strengthen our presence at the start 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 is struggling to ensure energy security amid a volatile geopolitical situation. India, which imports about 55% of its natural gas needs, aims 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 available to India. Shipments from Mozambique take three to seven days to reach India by sea, making it a better choice than several other suppliers. LNG shipments from the US, the main supplier of LNG to India, take approximately 25-50 days to reach India.
With the expansion of urban gas distribution networks, India’s demand for natural gas is expected to grow further. An IEA report published in February this year projects India’s natural gas demand to grow by nearly 60% by 2030, putting India’s projected gas demand on par with some of the world’s largest consumers.
