OVL-OIL to buy Videocon's 10% in Mozambique field for $2.45 bn

OVL to hold 60% stake in JV, OIL to have remaining 40%

ONGC Videsh Ltd and Oil India will buy Videocon Industries' 10 per cent stake in Mozambique gas field for $2.475 billion.

The acquisition of the stake will be done through a joint venture of OVL, the overseas arm of state-owned Oil and Natural Gas Corp (ONGC) and OIL, a statement issued by ONGC said.

OVL will hold 60 per cent stake in the joint venture while OIL will have the remaining 40 per cent.

"OVL and OIL have signed a definitive agreement with Videocon Mauritius Energy Ltd to acquire 100 per cent of (its) shares in Videocon Mozambique Rovuma 1 Ltd for $2.47 billion," the statement said.

The deal is subject to approvals of the governments of Mozambique and India, relevant regulatory approvals, pre-emption rights and other customary conditions. The transaction is expected to close in fourth quarter of 2013.

The field, Mozambique's offshore Area 1, may hold as much as 65 trillion cubic feet (Tcf) of gas resources.

Area 1 covers about 2.6 million acres in the deep-water Rovuma Basin offshore Mozambique and represents the largest gas discovery offshore East Africa with an estimated recoverable reserves of 35 to 65 Tcf.

"Area 1 has the potential to become one of the world's largest LNG producing hubs by 2018," the statement said.

The partners in Area 1 include Anadarko, operator of the project, ENH, Mitsui, BPCL and PTTEP.

The Area 1 LNG project is strategically located to supply LNG to India at a competitive price. Participation of OVL and OIL in the project will facilitate access of LNG to the growing Indian gas market. OVL and OIL will also need to devote significant funding and technical resources to the development of the project, which will also enhance the strong business and cultural links between Mozambique and India.

“Considering the growing importance of natural gas in the primary energy basket, this acquisition is a significant step by OVL/ONGC group towards the energy security of our country”, said Sudhir Vasudeva, Chairman, OVL.

The acquisition would mark OVL’s entry into this emerging offshore gas basin with significant future upside potential, and is consistent with OVL's strategic objective of adding high quality international assets to its existing E&P portfolio. The acquisition would increase OVL’s reserve and resource base resulting a step further towards India’s energy security. The project would also be an important milestone in reaching OVL's long-term production targets of 20 MMTOE by FY’18 and 60 MMTOE by FY’30.