OVL-OIL acquires Videocon's gas stake for $2.48 b

Gas field located off Mozambique

State-owned ONGC Videsh Ltd (OVL) and Oil India on Tuesday paid $2.475 billion to Videocon Group for acquiring 10 per cent stake in a giant gas field off Mozambique.

The resource accretion from this acquisition would be around 10 tcf, about one-fifth of India’s present proven gas reserves.

OVL, the overseas arm of state-run explorer Oil and Natural Gas Corp (ONGC), and Oil India (OIL) had jointly bought Videocon Group’s 10 per cent interest in the Rovuma Area-1 for $2.475 billion.

Additionally, OVL bought US energy company  Anadarko Petroleum’s 10 per cent stake in the same block for $2.64 billion.

“The payments to Videocon were made today,” said a source with direct knowledge of the development, adding that “payments to Anadarko will be made before February-end.”

OVL raised about $1.5 billion in one-year bridge loans from foreign lenders to fund its part of the payment to Videocon while OIL raised $900 million in debt for its share.

The source said OVL will raise another $2.6 billion to fund the Anadarko payments.

Videocon, he said, was originally seeking over $2.8 billion for the 10 per cent stake in the block that is estimated to hold a minimum of 35 trillion cubic feet (tcf) of gas reserves.

A unit of Bharat Petroleum Corp (BPCL) already has a 10 per cent stake in the block, which is estimated to hold a maximum of 65 tcf gas reserves.

The resource accretion from this acquisition for 20 per cent interest would be around 10 tcf, which is about one-fifth of India’s present proven gas reserves.

“This acquisition will help us meet our energy needs as gas in the block will be turned into LNG for sale into markets like India,” the source said. The two transactions are to close by February 2014. The acquisition would mark entry of OVL and OIL into the largest gas discovery in offshore East Africa.

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