ONGC has opened an office in Houston for coordinating with Anadarko, says NK Verma, MD, ONGC Videsh. ONGC Videsh, Verma says in an interview with ET Now, is discussing all aspects of Mozambique’s offer to provide cost recovery rights to production and development of its LNG Terminal with the government. Excerpts:
ET Now: The news that we have is that the Mozambique has agreed to offer cost recovery rights to production and development of its gas field and the LNG terminal in that country, what would this mean for ONGC Videsh?
NK Verma: We had been discussing this particular aspect with the government for quite some time, and the government has agreed for including this LNG plant capital expenditure as a part of the SA. That will actually facilitate the faster recoveries of the investment and also facilitate an integrated project development with full alignment of all partners along with the government.
ET Now: What is your current business operation or business set up in Mozambique?
NK Verma: Right now we have got one office opened in Houston for coordinating with Anadarko, that is the operator, and another office in Maputo we have opened for coordinating with the local authorities.
ET Now: I just want three numbers if you can give me, what is the full capex that you have lined in Mozambique?
NK Verma: Right now we have invested $4 billion plus in the entry cost and in the initial phase of development for two trains; anything between $2.5 to $3 billon will be expected from our side.
ET Now: How much would it boost the prospects of your revenue and earnings eventually post this capex?
NK Verma: Actually it will be producing once the trains are functional, it will be bringing around 12 bpm of gas per annum and we have got 16% so depending on this contract eventually signed with the purchasers, revenue will be guided on that.
ET Now: But no estimates sir, on what is a ballpark estimate maybe a percentage jump that could come in both for your revenues and bottom line?
NK Verma: Right now it will be premature to guess on that because LNG market is quite volatile these days so ultimately it will depend on the contract finally we sign.
ET Now: But needless to say that nothing will change in FY’16 and FY’17 the incremental benefits will only come from FY’18 right?
NK Verma: I think it is 2020, not ’18 because ultimately LNG development will happen once have FID next year in the first half, the first train will be out in 2020.
Source: The Economic Times