OVL, OIL buy Mozambique gas field stake for $2.48 bln

MUMBAI (Reuters) - ONGC Videsh Limited (OVL), subsidiary of state-run ONGC, and Oil India have signed an agreement to buy a 10 percent stake in a Mozambique gas field from Videocon Group for $2.48 billion, the state companies said on Tuesday.

ONGC, which faces diminishing supplies from its ageing oil and gas fields in India and has been buying interests in overseas assets, announced the deal earlier this month but later withdrew the statement.

"This acquisition is a significant step towards the energy security of our country," ONGC Chairman Sudhir Vasudeva said in a statement on Tuesday.

Demand for gas in Asia's third-largest economy far outstrips production, as India's need to keep prices cheap for strategic industries deters investment in costly producing areas and in pipelines and terminals for more expensive LNG.

India, the world's fourth-largest energy consumer, uses coal for nearly 56 percent of its energy needs, while oil accounts for another 26 percent. It aims to double the portion of gas in its energy mix to 20 percent by 2020.

Recent discoveries have turned Mozambique's Rovuma offshore field into a major draw for global energy producers and boosted Mozambique's gas reserves to around 150 trillion cubic feet, enough to supply world number-one LNG importer Japan for 35 years.

The Rovuma field has the potential to become one of the world's largest liquefied natural gas (LNG) producing hubs by 2018 and is located close to the India market.

Anadarko Petroleum Corp , the operator of Rovuma's Area 1 block in which it holds a 36.5 percent stake, and Videocon had each launched an auction of a 10 percent stake in the block earlier this year.

The two Indian state companies have also bid a similar amount for Anadarko's 10 percent stake, a source with direct knowledge of the matter told Reuters earlier this month.

At 3:00 p.m., shares in ONGC were up 4.6 percent, compared with a 0.8 percent gain in the broader Mumbai market. Videocon shares were trading 3.7 percent lower.

(Reporting by Swati Pandey and Prashant Mehra; Additional reporting by Jo Winterbottom in NEW DELHI; Editing by Jijo Jacob and Edmund Klamann)