State owned energy firms ONGC Videsh Ltd and Oil India Ltd, together with their foreign partners, have met conditions precedent for the first debt drawdown from the USD 14.9 billion facility they had tied up to part-finance their USD 24.1 billion LNG project in Mozambique.
“The first drawdown from project financing is expected in April 2021,” OIL said in a stock exchange filing. Led by French energy giant Total, the project envisages producing 12.88 million tonnes per annum of LNG from gas discovered in Area-1, offshore Mozambique.
“Oil India Ltd (OIL), the national oil company of India, announces that Mozambique Rovuma Offshore Area-l Project has satisfied all the conditions precedent for the first debt drawdown of the project financing,” it said.
The project financing was finalised in July last year. “The senior debt financing of USD 14.9 billion comprises export credit agencies direct loans, ECA covered facilities, commercial bank facilities and a loan facility with the African Development Bank,” it said.
Indian firms hold a total of 30% stake in Area-1, which has around 75 trillion cubic feet of recoverable gas resource. The consortium operating Area-1 had approved the final investment decision (FID) on June 18, 2019.
The total cost is estimated at USD 24.1 billion and is to be funded through a combination of debt (USD 15.8 billion), equity (USD 7.4 billion) and cash flow from operations (USD 0.8 billion).
Of the debt part, USD 14.9 billion is through senior debt financing. This financing comprises a loan facility with the African Development Bank, loans from commercial banks and credit from other financing institutions.
The project entails designing, building and operating an integrated liquefied natural gas (LNG) plant, including offshore extraction, underwater pipeline, onshore processing plant, as well as ancillary support facilities. It will have a capacity of 12.88 million tonnes per annum of LNG and will source gas from the Golfinho-Atum (GA) field within Area-1, which is located 40 kms off the coast of Mozambique.
The project will supply gas for LNG exports (mainly to Europe and Asia) and domestic consumption. ONGC Videsh Ltd (OVL), the overseas investment arm of state-owned Oil and Natural Gas Corp (ONGC), holds 16% stake in Area-1, while Bharat Petroleum Corp Ltd (BPCL) has 10%. Oil India Ltd has 4% interest.
Total is the operator of the project with 26.5% stake while Mitsui of Japan has 20%. PTT Exploration of Thailand holds 8.5% and Mozambique’s oil and gas company, ENH the remaining 15% of shares in the project.
As much as 11.14 million tonnes per annum of LNG, or 86% of production capacity, has already been sold to off takers from Japan, India, China, the Netherlands, Indonesia, and France. The Area-1 project is expected to start in 2024 and reach full production by 2025.
