26 May Extraction of natural gas in Mozambique will likely start in 2021
25/05/2016 source “Indian Times”
The beginning of the extraction of natural gas in the block Area 1, at north of Mozambique, in which Indian companies have a joint source of the problem is the sharp drop in natural liquified gas prices over the past two years, following to an oversupply that left both sellers and buyers unsafe for signing long-term contracts.
A source from the industry said that the fall in prices of both oil and natural gas has caused companies to postpone investment decisions “since customers do not queue to buy the product.” “It’s the classic case of the chicken and the egg, as it is not possible to establish supply agreements once the final investment decision was not taken because it’s not possible to know exactly who will buy the gas.” According to the same source, the final investment decision is expected to be taken this year and the production may be started in 2021, three years later than was announced by the Indian group Oil and Natural Gas Corporation (ONGC), which in 2013 it acquired a stake in the project.
The case of Mozambique is not unique, because there are several other projects facing with the same uncertainties, although in this case Anadarko Petroleum of the United States, the block operator group Area 1, has already signed some gas supply contracts.
ONGC and Oil India got together a 10% stake in the block to Videocon Mauritius Energy Ltd for the sum of 2,475 million Dollars and two months later ONGC acquired another 10% from Anadarko Petroleum, having paid 2,640 million Dollars. The Indian group Bharat Petroleum Corporation entered the project in 2008 with a 10% stake; Anadarko Petroleum, with 26,5%, is the operator.