ONGC Videsh Ltd (OVL) has agreed to pick up a 10 per cent stake in a Mozambique gas field from US energy major Anadarko Corp for $2.6 billion.
The deal marks OVL’s fourth acquisition this year.
In a statement, OVL, the overseas investment arm of ONGC, said it had signed definitive agreements on August 24 with Anadarko Moçambique Area 1 Limitada to acquire a direct, 10 per cent participating interest in the Rovuma Area 1 Offshore Block in Mozambique for $2,640 million ($2.6 billion).
However, the deal is subject to approvals by the governments of Mozambique and India, as well as relevant regulatory approvals, pre-emption rights and other customary conditions, the company said.
The transaction is subject to the usual closing conditions and has a long stop date of February 28, 2014.
Speaking to Business Line , OVL Managing Director D.K. Sarraf said: “Funding for the project will be from both internal and external sources. A decision will be taken by the treasury of ONGC and OVL considering strategic issues.”
Additional stake
The acquisition of an additional 10 per cent interest follows the earlier announcement of a joint acquisition with Oil India Ltd of an indirect 10 per cent interest in the block from Videocon Mauritius Energy Ltd.
BPRL Ventures Mozambique B.V., another Indian PSU, already holds a 10 per cent interest in Area 1.
Area 1 covers approximately 2.6 million acres in the deep-water Rovuma Basin, offshore Mozambique.
It represents the largest gas discovery in offshore East Africa, with estimated recoverable resources of 35-65 trillion cubic feet. The partners in Area 1 include Anadarko, operator of the project, ENH, Mitsui, BPRL, Videocon and PTTEP.
The Area 1 offshore block has the potential to become one of the world’s largest liquefied natural gas (LNG) producing hubs.
Strategic location
The block’s LNG project is strategically located to supply LNG to India at a competitive price, OVL said.
It added that the participation of Indian PSUs in the project will facilitate access to LNG by the growing Indian gas market.
“As a result of both transactions, OVL will own a significant interest in this strategic project in Mozambique. Area 1 has the potential to become one of the world’s largest LNG projects,” said Sudhir Vasudeva, Chairman, OVL and Chairman and Managing Director, ONGC.