ONGC, OIL buy 10 percent stake in Mozambique gas field

New Delhi : State-run explorers Oil and Natural Gas Corp (ONGC) and Oil India Ltd (OIL) will buy the 10 percent stake of Videocon Industries 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 Tuesday said that in a joint venture with ONGC Videsh Ltd (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 transport the LNG from Mozambique to India.

The transaction is expected to close in the fourth quarter of 2013, said OIL.

“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.