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 USD 2.475 billion, the companies said today. OVL, the overseas arm of state-run explorer Oil & Natural Gas Corp, and OIL agreed in June last year to jointly buy Videocon's 10 percent interest in the Rovuma Area 1 for USD 2.475 billion.
Additionally, OVL bought US energy major Anadarko Petroleum's 10 percent stake in the same block for USD 2.64 billion. Payments to Videocon to close the deal were made yesterday, the companies said in separate, almost identical statements. OVL will pay Anadarko before February-end. OVL raised about USD 1.5 billion in one-year bridge loans from foreign lenders, while OIL borrowed USD 900 million to fund their respective share of payments to Videocon.
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Sources said OVL will raise another USD 2.6 billion for the Anadarko payments. "OVL and OIL have completed the acquisition of 10 percent interest in the Rovuma Area 1 offshore block, Mozambique, by acquiring 100 per cent shares of Videocon Mozambique Rovuma 1 Ltd, the company holding the 10 per cent interest in the Area 1, from Videocon Mauritius Energy Ltd," OVL said in thestatement.
The 10 percent stake will be split in a 60:40 ratio between OVL and OIL. The two firms had signed definitive agreements with Videocon Mauritius Energy on June 25 to acquire the stake in the gas field. Area 1 covers about 2.6 million acres in the deepwater Rovuma Basin and represents the largest gas discovery in offshore East Africa, with recoverable reserves estimated at 35 to 65 trillion cubic feet.
"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," the OVL statement said. 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," OIL said in the statement. "OIL and OVL will devote significant financial and technical resources to the development of the project."
Videocon will explore additional investment opportunities in Mozambique, Videocon Director Kuldeep Drabu said in a statement. "Videocon shall also continue to explore more opportunities in energy sector elsewhere...pursuant to its corporate objective and strategy to remain actively invested in E&P activities worldwide," he said in the statement. The company holds oil and gas assets in Brazil, Indonesia, East Timor and Australia through its Cayman Island-based subsidiary, Videocon Hydrocarbon Holdings Ltd.
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