Reviving Energy Ties: India and Mozambique's $20 Billion LNG Initiative

Reviving Energy Ties: India and Mozambique's $20 Billion LNG Initiative

India and Mozambique are currently engaged in discussions aimed at restarting a significant $20 billion Liquified natural gas (LNG) project located in Mozambique's Cabo Delgado province. This project is strategically crucial for India's energy security, with three Indian Public Sector Undertakings (PSUs) holding a collective 30% stake.

Hardeep Singh Puri, India's Union Minister for Petroleum and Natural Gas, has actively participated in diplomatic efforts to revitalize this project, which has been on hold due to militant attacks and force majeure claims made by TotalEnergies, the project's primary operator.

Key Points of Discussion

• Strategic Importance: The project is vital for India's plans to diversify its energy portfolio, with the Indian government aiming to increase the share of natural gas in the energy mix from 6% to 15% by 2030.
• Geopolitical Benefit: Mozambique provides an alternative to Middle Eastern energy sources, thus mitigating certain geopolitical risks. Its proximity to India's western coast also enhances logistical convenience.
• Force Majeure: The halt of the project in 2021 was triggered by TotalEnergies citing force majeure due to violent incidents involving militants associated with the Islamic State.
• Action Plan: A report released in May 2023 proposed strategies to improve local living conditions, and TotalEnergies committed to executing an action plan based on these recommendations.
• Indian Stake: The participation of Indian PSUs, including ONGC Videsh, Oil India, and Bharat Petro Resources Limited, underscores India's robust approach to securing diverse energy sources.
• Future Prospects: The ongoing discussions signal a proactive approach from both nations to revitalize this key project, which could significantly enhance LNG availability in India and support its goal of energy diversification.

The revival of this project presents India with a chance to secure a long-term, reliable source of natural gas, aligning perfectly with its focus on sustainable and diversified energy resources. The collaborative efforts between India and Mozambique highlight the importance of international partnerships in achieving energy security.

Frequently Asked Questions (FAQs)

Q1. What is the significance of the LNG project in Mozambique for India?
Answer: The LNG project is essential for India's energy diversification, aiming to increase natural gas's share in its energy mix from 6% to 15% by 2030, enhancing energy security.

Q2. Why was the LNG project halted in 2021?
Answer: The project was paused due to force majeure claims by TotalEnergies, triggered by militant attacks linked to the Islamic State in the Cabo Delgado region.

Q3. What role do Indian PSUs play in the LNG project?
Answer: Indian PSUs, including ONGC Videsh, Oil India, and Bharat Petro Resources Limited, collectively hold a 30% stake in the project, reflecting India's commitment to energy diversification.

Q4. How does Mozambique's location benefit India in terms of energy supply?
Answer: Mozambique's proximity to India's west coast provides logistical advantages and serves as a reliable alternative to Middle Eastern energy sources, reducing geopolitical risks.

Q5. What are the future prospects of the LNG project for India?
Answer: The successful restart of the LNG project could significantly boost India's LNG availability and support its long-term energy diversification and security goals.

UPSC Practice MCQs

Question 1: What is the aim of India's energy diversification plan by 2030?
A) Increase the share of coal
B) Increase the share of natural gas
C) Decrease reliance on renewables
D) Focus solely on oil
Correct Answer: B

Question 2: Which Indian PSUs are involved in the Mozambique LNG project?
A) Reliance Industries
B) ONGC Videsh, Oil India, and Bharat Petro Resources Limited
C) Hindustan Petroleum
D) Indian Oil Corporation
Correct Answer: B

Question 3: What triggered the force majeure claims by TotalEnergies in 2021?
A) Economic downturn
B) Natural disasters
C) Militant attacks tied to the Islamic State
D) Policy changes in Mozambique
Correct Answer: C

Question 4: How does Mozambique's location impact its energy supply to India?
A) It increases transportation costs
B) It reduces geopolitical risks
C) It complicates supply routes
D) It has no impact
Correct Answer: B

Question 5: What is a key recommendation from the May 2023 report regarding the LNG project?
A) Immediate halt of operations
B) Improvement of local living conditions
C) Increase in gas prices
D) Reduction of Indian involvement
Correct Answer: B