The $20 billion liquefied natural gas project in Mozambique, where two state-owned Indian firms – ONGC Videsh Ltd (OVL) and BPCL together hold a 30 per cent stake, has been suspended indefinitely after an escalation of violence in the area, according to a regulatory filing.
French energy giant Total SE, which is the project lead, declared force majeure on its LNG development in Mozambique, mothballing the investment, Bharat Petroleum Corporation Ltd (BPCL) said in a stock exchange filing Tuesday.
BPRL Ventures Mozambique BV, an overseas subsidiary of Bharat PetroResources Ltd (BPRL) that is a wholly-owned subsidiary of BPCL, holds 10 per cent participating interest (PI) in the Area 1 concession. ONGC Videsh Ltd has 16 per cent interest and Oil India Ltd another 4 per cent.
Considering the evolution of the security situation in the north of the Cabo Delgado province in Mozambique, the Area 1 Operator, Total E&P Mozambique Area 1 Limitada, informed the withdrawal of all Mozambique LNG project personnel from the Afungi site. Total E&P Mozambique Area 1 Limitada, a wholly-owned subsidiary of Total SE, operates Mozambique LNG with a 26.5 per cent participation.
Force majeure is a provision that allows parties to suspend or end contracts because of events that are beyond their control, such as wars or natural disasters. The French energy major said it had activated the contractual get-out “considering the evolution of the security situation” in Mozambique’s northernmost Cabo Delgado region.
Dozens of civilians, including foreign workers, were killed in the Islamic State-linked attacks in the coastal Mozambique town of Palma. The attack came just as Total was resuming work on the project last month after it was stalled since January because of security threats.
Before the Palma attack, the Total-led consortium had signed up to almost $15 billion in loans attached to the LNG project. After the force majeure, the debt drawdown will be temporarily paused. The project, which is targeting an output of 12.9 million tonnes a year of LNG, was to produce its first gas in 2024.