ONGC Videsh Ltd. (OVL) and Oil India Ltd. (OIL) have agreed to purchase Videocon Mauritius Energy Ltd.’s 10% share in the Rovuma Area 1 Offshore Block in Mozambique (Area 1) for US $2.47 million.
The acquisition will give OVL 60% stake and OIL 40% stake in Area 1, respectively. The acquisition is subject to the approvals of the Mozambique and Indian governments, relevant regulatory approvals, pre-emption rights and other customary conditions. The companies are projected to close 4Q 2013.
Area 1 covers about 2.6 million acres in the deepwater Rovuma Basin off Mozambique and represents the largest gas discovery in off East Africa with estimated recoverable reserves of 35 to 65 Tcf.
“Considering the growing importance of natural gas in the primary energy basket, this acquisition is a significant step by OVL/ONGC group towards the energy security of our country," said Sudhir Vasudeva, chairman, OVL.
First LNG from Area 1 is expected by 2018.
ONGC said the project is strategically located to supply LNG to India at a competitive price, and that the company's participation in the project will facilitate access of LNG to the growing Indian gas market. OVL and OIL will need to devote significant funding and technical resources to the development of the project, which will also enhance the strong business and cultural links between Mozambique and India.
The acquisition of Videocon's stake would be the second largest by an Indian energy firm after OVL's $5 billion deal to buy ConocoPhillips' 8.4% stake in Kazakhstan's Kashagan project, touted as the biggest oil find since the 1960s. OVL is still awaiting Kazakhstan government's approval for the deal.
The acquisition would also increase OVL’s reserve and resource base, resulting in a step further towards India’s energy security. The project would also be an important milestone in reaching OVL's long-term production targets of 20 MMTOE by FY’18 and 60 MMTOE by FY’30.
Partners include Anadarko, operator of the project, ENH, Mitsui, BPCL and PTTEP.
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