India on Friday pressed Mozambique to approve a law that will help protect its investments in the African nation, as state-owned ONGC gears up to invest $3 billion (Rs 18,200 crore) in a giant gas field there.
Oil minister Dharmendra Pradhan pressed visiting Mozambique foreign minister Oldemiro Julio Marques Baloi for early passage of the law as general elections are slated to be held in the country soon.
ONGC Videsh Ltd (OVL), the overseas arm of state explorer Oil and Natural Gas Corp (ONGC), along with Oil India Ltd (OIL), have spent about $5 billion in acquiring a 20%-stake in Area-1 gas field. Their share of investment for developing the offshore gas field and converting the fuel into LNG for export would be another $3 billion or more.
Though the required law and investment agreements are in place for the Production Sharing Contract (PSC) for the upstream component, the special regimes required for midstream and downstream investment (pipelines and LNG plants) are yet to be finalised, sources said.
The special regimes for midstream and downstream investment require passing of a decree law and an LNG investment agreement with the approval of the Parliament of Mozambique.
While the Mozambique cabinet has approved the decree law, it is awaiting Parliament nod, sources said. Any delay in the Parliament nod will push back the project as after the general elections, a new Parliament may take some time to constitute and approve the decree.
This, they said, may result in erosion in the value of project.
Sources said OVL and partners are targeting 2019 for start of gas production.
During the meeting, an MoU was signed between India and Mozambique on cooperation in the field of oil and gas for five years. “The objective of the MoU is to enhance bilateral cooperation on the basis of equality and mutual benefit,” a statement said.