India's BPCL expects $3.5-$4bn cost escalation for Mozambique LNG project
The Mozambique LNG export project, which has been under force majeure since 2021 due to attacks by Islamic State terrorists, could see a cost escalation of $3.5bn to $4bn due to the delay, the management of Indian state-backed energy company BPCL said on July 20 during an analyst call.
BPRL Ventures Mozambique, a subsidiary of BPCL, along with two other Indian state-owned companies, ONGC and Oil India, own a combined 30% stake in the TotalEnergies-backed project. ONGC Videsh holds a 16% share, while BPRL Ventures Mozambique and Oil India have 10% and 4% ownership, respectively.
BPCL management stated that the initial total Mozambique LNG project cost was about $15.5bn. The cost is expected to rise to around $19.5bn to $20bn.
The project remains under force majeure, but BPCL expects positive developments soon.
“We are expecting maybe in another one quarter some good things can happen. The existing vendors and contacts are in place. The project financing discussions are happening with the lender. Maybe we have to wait for one more quarter to see when the force majeure is lifted,” the BPCL management said.
The Mozambique LNG project, the first onshore LNG plant in the country, involves the development of the Golfinho and Atum fields in Offshore Area 1 and the construction of two liquefaction trains with a total capacity of 13.1mn tonnes/year.
On April 26, 2021, considering the evolution of the security situation in the north of Cabo Delgado province, Mozambique LNG withdrew all project personnel from the Afungi site. This situation also led the Mozambique LNG project partners to declare force majeure.
Earlier this year, TotalEnergies CEO Patrick Pouyanne said that the company was remobilising the contractors and is not “far off from having everything lined up with them.”
Pouyanne added that the partners are in the process of re-engaging with all the financial institutions involved around the world. “Once that is completed, we will restart the project,” he said.
The French energy company holds a leading 26.5% stake in the project.