The Cabinet Committee on Economic Affairs, Government Of India, 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 Participating Interest (PI) in Rovuma Area 1 Offshore Block in Mozambique (Area 1).
The transaction comprises acquisition of:
(a) 100 percent of shares in Videocon Mozambique Rovuma 1 Limited, the company holding a 10 percent PI in Area 1, from Videocon Mauritius Energy Limited, a subsidiary of Videocon Industries Limited, jointly by OVL and OIL for US$ 2,475 million. Closing is expected before 31st December 2013; and
(b) another 10 percent PI in Area 1 from Anadarko Mozambique Area 1 Limitada, a subsidiary of Anadarko Petroleum Corporation solely by OVL for US$ 2,640 million, with closing in February, 2014.
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).
Partners in Area 1 include Anadarko, operator of the project, ENH (National Oil Company of Mozambique), Mitsui (Japan), BPRL (Subsidiary of BPCL), Videocon and PTTEP (National Oil Company of Thailand). 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 resource accretion from this acquisition for 20 percent PI would be around 10 tcf which is about 20 percent of India’s present proven gas reserves, and is consistent with the strategic objective of OVL and OIL of adding high quality international assets to their existing E&P portfolio.
Press Release, October 04, 2013