Maputo — The Indian government has offered to build factories for oil and chemical products in Mozambique – provided the energy used by these factories is subsidised by the Mozambican government, according to a report in the Indian "Economic Times" newspaper.

"We said that our state companies are available to install urban gas distribution systems, fertiliser factories and oil derivatives and chemical factories if the gas needed to supply those projects was provided at the right price," according to an Indian official cited by the paper.

He was speaking to the "Economic Times" shortly after the Indian oil minister, S Jaipal Reddy met with Mozambique's deputy minister of mineral resources, Abdul Razak Noormahomed, on the sidelines of the Petrotech 2012 conference in New Delhi.

Exploration in the Rovuma Basin off the coast of the northern Mozambican province of Cabo Delgado has so far discovered reserves of at least 130 trillion cubic feet of natural gas.

Two Indian companies – Bharat PetroResources and Videocon Industries – each have a 10% stake in the Rovuma Basin Area 1, operated by US company Anadarko Petroleum.

Noormahomed said in New Delhi that the Mozambican government plans to auction off a further 12 blocks for oil and gas exploration in mid 2013.

Indian companies are expected to put forward proposals for the auction.

The Indian official also said that it was easier to import urea than gas, and this was why companies are interested in setting up fertiliser factories in Mozambique. The companies interested in doing so include Rashtriya Chemical and Fertilizers Ltd, which announced plans to invest two billion US dollars in building a factory in Mozambique to produce 1.2 million tons of urea and 650,000 tonnes of phosphates per year.