|OVL MD D K Sarraf|
STATE-owned oil majors ONGC Videsh Ltd (OVL) and Oil India Ltd (OIL) have completed the acquisition of Videocon Group's 10-percent stake in a giant Mozambique gas field for $2.475 billion, the companies said. “ONGC Videsh Limited (OVL) and Oil India Limited (OIL) have completed the acquisition of 10 percent PI in the Rovuma Area 1 offshore Block, Mozambique by acquiring...100 percent shares of Videocon Mozambique Rovuma 1 Limited, the company holding the 10 percent PI in the Area 1 from Videocon Mauritius Energy Limited,” OVL said in a statement. OVL, the overseas wing of Oil & Natural Gas Corp (ONGC), and OIL agreed in June last year to jointly buy Videocon's 10 percent interest in the Rovuma Area 1 for $2.475 billion. OVL has also bought US energy major Anadarko Petroleum's 10 percent stake in in the same block for $2.64 billion.
Payments to Videocon to close the deal were made on Tuesday, the two oil companies said.
OVL raised about $1.5 billion in one-year bridge loans from foreign lenders, while OIL borrowed $900 million to fund their respective share of payments to Videocon.
The 10-percent stake will be split in a 60:40 ratio between OVL and OIL. OVL and OIL had signed definitive agreements with Videocon Mauritius Energy on June 25 to acquire the stake in the gas field.
Area 1 covers approximately 2.6 million acres in the deep-water Rovuma Basin, offshore Mozambique and represents the largest gas discovery in offshore East Africa with estimated recoverable reserves of 35 to 65 trillion cubic feet. The partners in Area 1 include Anadarko (operator of the project), ENH (the NOC of Mozambique), Mitsui, BPRL, and PTTEP.
"This marks OVL’s entry into this emerging world class offshore gas basin with significant future upside potential. Area 1 has the potential to become one of the world’s largest LNG producing hubs and is strategically located to supply LNG to the growing Indian gas market,” OVL said in a statement. The partners in Area 1 include Anadarko, the operator of the project, ENH (the national oil company of Mozambique), Mitsui, BPRL (a unit of Bharat Petroleum Corp Ltd) and Thailand's PTT Exploration and Production.
“The Area 1 LNG project is strategically located to competitively supply LNG to India, and OIL's and OVL's participation in the project will facilitate access to the growing Indian gas market which will supplement the country's energy security endeavour. OIL and OVL will also devote significant financial and technical resources to the development of the project. This investment is expected to further enhance the strong business and cultural links between Mozambique and India,” OIL said in a press release.
A top Videocon official said it will explore additional investment opportunities in Mozambique. Videocon holds oil and gas assets in Brazil, Indonesia, East Timor and Australia through its Cayman Island-based subsidiary, Videocon Hydrocarbon Holdings Ltd.
OVL has already made deep global forays and thus far participated in 32 projects in 16 countries including Azerbaijan, Brazil, Colombia, Iraq, Kazakhstan, Libya, Myanmar, Russia, South Sudan, Sudan, Syria, Venezuela and Vietnam. OVL is currently producing 160 thousand barrelsof oil and oil equivalent gas per day and has total oil and gas reserves of about 433 mmtoe as on 31 March 2013.