ONGC, OIL buy 10 percent stake in Mozambique gas field

State-run explorer ONGC's foreign arm ONGC Videsh (OVL) and Oil India Ltd (OIL) will buy the Videocon Industries' stake in a Mozambique gas field for about $2.5 billion.

Videocon Mozambique Rovuma 1 Ltd, a subsidiary of Videocon Mauritius Energy Ltd, holds 10 percent participating interest in the Rovuma Area 1 Offshore Block in Mozambique.

Mozambique's offshore Area 1 may hold as much as 65 trillion cubic feet (Tcf) of gas and has the potential to be one of the world's largest liquefied natural gas (LNG) hubs.
OIL said Tuesday that in a joint venture with OVL, it signed definitive agreements to acquire Videocon Mozambique Rovuma 1 Ltd for $2.475 billion. The acquisition will be done via a Special Purpose Vehicle (SPV) jointly-owned by the two firms.

OVL will hold 60 percent stake in the joint venture, while OIL will hold the remaining 40 percent.

OVL will look to transporting the LNG from Mozambique to India.

"The acquisition is subject to the approvals of the governments of Mozambique and India, relevant regulatory approvals, pre-emption rights and other customary conditions," the statement said.

Earlier on June 10, ONGC Videsh had announced the same deal. However, it withdrew their statement after a few hours without citing any reasons.

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

"This investment is expected to further enhance the strong business and cultural links between Mozambique and India," OIL said.

Between the two upstream companies, this is the third overseas acquisition within a year.

OIL and Indian Oil Corp have jointly acquired 30 percent stakes in Carrizo Oil & Gas Inc's Niobrara shale gas assets in Colorado, in the United States.

OVL has agreed to pay $5 billion to acquire Conoco Phillip's 8.4 percent stake in a Kazakhstan oilfield. The Kashagan field, located in the shallow waters of the Kazakh North Caspian Sea, is the world’s largest development project.

OVL currently has a presence in 31 exploration and production projects in 15 countries - Vietnam, Iraq, Libya, Syria, Sudan, South Sudan, Iran, Cuba, Brazil, Venezuela, Russia, Myanmar, Colombia, Nigeria and Kazakhstan.