ONGC Videsh, Oil India to pay $2.5 billion for Mozambique gas field stake

By Sumeet Chatterjee and Nidhi Verma

MUMBAI/NEW DELHI (Reuters) - Indian state companies ONGC Videsh Ltd and Oil India Ltd have agreed to buy a 10 percent stake in a Mozambique gas field from Videocon Group for $2.48 billion, the parent company of ONGC Videsh said on Monday.

Separately, a source with direct knowledge of the matter said the two Indian energy companies had also bid a similar amount for a 10 percent stake in the Rovuma offshore field from U.S.-based Anadarko Petroleum Corp , which has a 36.5 percent stake in the field and is the operator.

Videocon, a conglomerate controlled by tycoon Venugopal Dhoot, paid $75 million for the Rovuma 1 stake in 2008 - before gas finds vastly increased its value and it emerged as a major supply base with potential to export into energy-hungry Asia.

 

ONGC Videsh is the overseas operations arm of explorer Oil & Natural Gas Corp , which faces diminishing supplies from its ageing oil and gas fields in India and has been buying interests in overseas assets.

The price is roughly in line with market expectations.

"This is not only positive for these two companies but also for India in terms of finding new sources of energy," said K.K. Mital, chief executive of portfolio management services at Globe Capital Market. "Both the companies have a good amount of cash and it makes sense to deploy some of it in a gas-rich area."

The acquisition of Videocon Mozambique Rovuma 1 Ltd will be made through a newly formed entity in which ONGC Videsh will hold a 60 percent stake and Oil India the remainder, ONGC said in a statement.

The field has the potential to become one of the world's largest liquefied natural gas (LNG) producing hubs by 2018, and is strategically located to supply gas to India at competitive prices, it added.

Anadarko and Videocon had each launched an auction of their respective 10 percent stakes in the Mozambique field earlier this year.

Recent discoveries have turned the Rovuma offshore field into a major draw for global energy producers and boosted Mozambique's gas reserves to around 150 trillion cubic feet, enough to supply world number-one LNG importer Japan for 35 years.

After Anadarko, Japan's Mitsui & Co Ltd <8031.T> is the second-biggest holder in Mozambique's offshore Area 1 block, with a 20 percent stake.

Indian state refiner Bharat Petroleum Corp Ltd owns 10 percent while Thai state oil company PTT Exploration and Production PCL has an 8.5 percent interest and Mozambique's state-owned ENH 15 percent.

The remaining 10 percent is the stake being sold by the unit of Dhoot's Videocon Industries . The company is expected to use some of the sale proceeds to pare debt of more than $5.5 billion.

Last year, PTT trumped Royal Dutch Shell Plc in a hotly contested battle for Cove Energy Plc and its 8.5 percent of the Mozambique field, paying $1.9 billion.

(Editing by Tony Munroe and Anthony Barker)