ONGC jumps the gun, announces Videocon deal before it is due

ONGC jumps the gun, announces Videocon deal before it is due

State-owned Oil and Natural Gas Corp (ONGC) today jumped its own embargoes to announce a USD 2.5 billion buyout of Videocon Industries' stake in a giant Mozambique gas field even as the deal was said to be in works.

ONGC at 1751 hours today issued a statement saying said its overseas arm, ONGC Videsh Ltd, together with Oil India Ltd 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 USD 2475 million."

The statement came as a rude shock to OVL officials who said a deal has not been "fully" concluded and the announcement was premature.

OIL too felt such an announcement was at least a couple of days away and should have been done only when the requisite agreements had been signed.

Officials at both OVL and OIL said no event had happened which deserved such an announcement. The deal in works and an announcement was due only when all parties had signed the agreements.

OVL, which in normal course does not issue any statements and all its public affairs or media statements are handled by its parent ONGC, had even contemplated withdrawing the statement but resisted the temptation as the information had by then decimated across the world.

OVL Managing Director Dinesh K Sarraf was unavailable for comments and his office said he was travelling abroad. ONGC Chairman and Managing Director and OVL Chairman Sudhir Vasudeva did not answer several calls seeking comments.

Interestingly, the statement carried a quote of Vasudeva hailing the acquisition as "a significant step" towards "the energy security of our country."

In the third acquisition in 10 months, OVL-OIL will buy Videocon Mozambique Rovuma 1 Ltd's 10 per cent stake in the Rovuma-1 field for USD 2.475 billion, the statement said.

Rovuma field may hold as much as 65 Trillion cubic feet (Tcf) of inplace gas reserves, more than 10 times the reserves in Reliance Industries' eastern offshore KG-D6 fields.

The statement even detailed the understanding between OVL and OIL on the acquisition. The two firms will form a new venture to acquire Videocon's unit. OVL will hold 60 per cent of the venture and OIL the remaining 40 per cent, it said.

The transaction is expected to close in the last quarter of 2013 and is subject to approval of the two governments and existing partners in Rovuma-1 area waiving off their pre-emption rights.

Since September last year, OVL has announced deals worth about USD 8.5 billion.

In March, it completed acquisition of Hess Corp's 2.7 per cent stake in Azerbaijan's largest oil field and an associated pipeline for USD 1 billion.

Last November, it announced a USD 5 billion purchase of ConocoPhillips's 8.4 per cent stake in Kazakhstan's Kashagan project, touted as the biggest oil find since the 1960s when it was discovered in 2000. It is awaiting Kazaksthan government's approval for the deal.