BPCL hopes to restart stuck Mozambique project in a couple of quarters

Last year, BPCL had flagged that there will be additional $1.8 billion worth of investments in the Mozambique block in the next three to four years

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26 Aug, 2025 12:21

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Bharat Petroleum Corp Ltd (BPCL) expects the force majeure clause slapped on its $20-billion Mozambique LNG project to be lifted in the coming quarters, Director Finance Vetsa Rama Krishna Gupta said in a post-earnings call on October 30, adding that there are chances that the project’s costs will be reviewed.

"We are hopeful that shortly, maybe in the next couple of quarters something positive will work out," said Gupta, per an analyst call transcript uploaded on the Bloomberg terminal accessed by Moneycontrol.

He added that the company would need to reassess some of the pre-construction work that was carried out before the force majeure was announced.

In August 2008, BPCL's exploration and production subsidiary, Bharat PetroResources Ltd (BPRL), bought a 10 percent stake in the area-1 offshore of the Rovuma block from US energy major Anadarko Petroleum Corp, for  $75 million. The project has been under force majeure since April 2021 following the  worsening security situation due to attacks by Islamic State terrorists in the coastal town of Palma in Cabo Delgado province.

ALSO READ: BPCL swings to profit in Q2, beats estimates as soft crude prices improve marketing margins

"Once the force majeure is lifted, the operator and the consortium will reassess their plans and the time for the first cargo," he added.

Last year, the state-run oil and gas company had flagged that there will be additional $1.8 billion worth of investments in the Mozambique block in the  next three to four years. However, the company now expects costs to increase. Asked about increased pricing demand from sub-contractors of the project, Gupta said, "there is a strong possibility of reviewing the pricing or the commercial terms."

The comments come as BPCL swung to a consolidated net profit of Rs 8,501 crore in Q2 FY24, from a net loss of Rs 304 crore a year ago, mainly due to softer crude oil prices and lower raw material costs.

"Retail price cuts due to the upcoming elections and / or a surge in crude prices due to active quota management by OPEC+ remain key risks," brokerage Motilal Oswal said in a note on October 31.

"However, we highlight that even with crude at $85/bbl and MS (motor spirit - petrol) /HSD (high-speed diesel) cracks at long-term average levels, BPCL is expected to earn a marketing margin of Rs 8.9/6.7 per litre on MS / HSD," the brokerage added.

(Update: The designation of Vetsa Rama Krishna Gupta is corrected to Director Finance)