India Approves OVL, Oil India Mozambique Buy

India’s Cabinet Committee on Economic Affairs (CCEA) has approved the proposal of the Ministry of Petroleum and Natural Gas to authorize ONGC Videsh Limited (OVL) and Oil India Limited (OIL) to acquire 20 percent stake in Rovuma Area 1 Offshore Block in Mozambique (Area 1).

In June this year, the two states owned energy companies bought Videocon’s 10 per cent stake in Area 1 for $2.5 billion. In a separate transaction OVL bought another 10 per cent stake in Area 1 from Anadarko Petroleum by paying $2.6 billion.

Area 1 covers approximately 2.6 million acres in the deep-water Rovuma Basin and the acquisition would mark the entry of OVL and OIL into the largest gas discovery in offshore East Africa with estimated recoverable resources of 35 to 65 trillion cubic feet (tcf). 

Area 1 has the potential to be one of the world's largest LNG producing hubs as discovered gas resources are to be monetized through the construction of a LNG hub in Mozambique.

“It is also ideally suited to supply LNG to India at a competitive price due to its location. Participation of OVL and OIL in the project will facilitate access of LNG to the growing Indian gas market. As the asset is near to India the shipping cost would be low compared to other LNG sources from the USA, Canada and Russia,” the CCEA said in a statement.

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