Oil India, ONGC Buy Stake in Mozambique Gas Field

Oil India Limited (OIL), along with ONGC Videsh Limited (OVL), overseas arm of ONGC will pay $2.5 billion for Videocon’s 10% stake in Rovuma Area 1 Offshore Block in Mozambique. 

The acquisition is expected to be implemented via a newly incorporated entity, in which OVL and OIL are expected to hold 60% stake and 40% stake respectively. The transaction is expected to close in the fourth quarter of 2013.  

The transaction was first announced by ONGC on June 10 but was withdrawn the same day.

Area 1 covers approximately 2.6 million acres in the deepwater Rovuma Basin offshore Mozambique and represents the largest gas discovery offshore East Africa with estimated recoverable resources of between 35 and 65 TCF as per operator's estimates. Area 1 has the potential to become one of the world's largest LNG producing hubs with first LNG expected in 2018.

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 India added. 

OIL and OVL will devote significant financial and technical resources to the development of the project, OVL said in a statement.