Total-led consortium of OVL, BPCL, OIL secure $14.9 bn for Mozambique LNG project

• The project envisages setting up a 12.88 MTPA onshore LNG facility for the gas produced from offshore Area 1 Block of the deep-water Rovuma Basin

• The Total SA-led consortium operating Area-1 had announced the FID (final investment decision) on June 18, 2019

New Delhi: A consortium led by global energy major Total SA, which includes state-run BPCL, OVL and OIL among other foreign partners, has secured $14.9 billion debt to partly finance their $24.1 billion LNG project in Mozambique, OIL and BPCL said in a regulatory filing to the stock exchanges on Thursday. The project envisages setting up a 12.88 MTPA onshore LNG facility for the gas produced from offshore Area 1 Block of the deep-water Rovuma Basin.

"Oil India Limited, a National Oil Company of India, announces that Rovuma Offshore Area 1 consortium (Area-1), led by TOTAL confirms, the finalisation of the Mozambique LNG senior debt financing of USD 14.9 bn for the two train LNG project on 15th July 2020," said OIL in the regulatory filing.

LNG Mozambique: $14.9-bn debt

"The senior debt comprises of a mix of Export Credit Agencies (ECA) Direct Loans, ECA Covered Facilities, Commercial Bank facilities, and a loan facility with one multilateral development institution," BPCL told the stock exchanges. OIL added that the project is expected to achieve financial closure in the fourth quarter of the current financial year. It is expected to start in 2024 and reach full production by 2025. India holds a total of 30 percent stake in Area-1, which has around 75 trillion cubic feet of recoverable gas.

The Total SA-led consortium operating Area-1 had announced the FID (final investment decision) on June 18, 2019. The total cost of the project is estimated to be $24.1 billion and is to be funded through a combination of debt ($15.8 billion), equity ($7.4 billion) and cash flow from operations ($0.8 billion).

What does the project involve and why is it strategic for India?

The project involves designing, building and operating an integrated LNG plant, including offshore extraction, underwater pipeline, onshore processing plant, as well as ancillary support facilities. The Mozambique LNG project will supply gas for LNG exports (mainly to Europe and Asia) and domestic consumption. The site is also strategically located between Europe and Asia and for India, it will bring down the one-way ship journey to Northern India from 17 days trip (to Japan, the world's largest LNG import market) to seven days.

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