Mozambique govt allows cost recovery for OVL’s export-oriented gas asset
In a positive development for ONGC Videsh Ltd, the Mozambique government has agreed to offer costrecovery rights to production and development of its gas field and the LNG terminal in the African nation. Gas from the field is meant for exports and is expected to boost OVL’s revenue and bottom-line in the coming years.
ONGC Videsh Ltd, the overseas arm of government-owned ONGC, teamed up with Oil India Ltd and bought Videocon’s 10% stake in Mozambique’s Rovuma area 1 for $ 2.475 billion in June 2013. Subsequently in February 2014, OVL on its own bought another 10% stake in the same field from Anadarko Petroleum Corporation of the US for $2.64 billion. The 10% stake of Videocon purchased by OVL and OIL together is currently split in 6:4 ratio and total payout for OVL for the back-to-back acquisitions is $4.125 billion.
It is believed that the cost of the LNG trains would be integrated with the upstream cost and the whole cost will be made recoverable under the exploration and production concession contract (EPCC) from the revenue streams.