Mozam­bique govt al­lows cost re­cov­ery for OVL’s ex­port-ori­ented gas as­set

Power Watch India - - DESPATCHES FINANCE -

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.

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