ONGC Videsh to buy Anadarko's 10% stake in Mozambique gas field for $2.6B
ONGC Videsh Ltd (OVL), the overseas arm of oil & gas exploration major ONGC, has signed a definitive agreement to buy Anadarko Petroleum Corporation's 10 per cent stake in Rovuma Area 1 Offshore Block in Mozambique for $2.64 billion. Anadarko will remain the operator of Area 1 with a 26.5 per cent stake.
The acquisition, subject to approvals, is expected to close around the end of 2013.
This acquisition of additional 10 per cent stake follows the earlier announcement of an acquisition of 10 per cent stake held jointly by OVL and Oil India Ltd (OIL) by Videocon in the same offshore block.
Other stakeholders in the gas block include ENH (15 per cent), Mitsui (20 per cent), PTTEP (8.5 per cent) and BPCL’s arm BPRL (10 per cent). With this deal, the India government-controlled energy PSUs will own 30 per cent interest in the block which is estimated to have the largest gas discovery off the east coast of Africa.
OVL targets to achieve 20 MMTOE by FY18 and 60 MMTOE by FY30 and this new acquisition will help it achieve the target.
"As a result of both transactions, OVL will own a significant interest in this strategic project in Mozambique. Area 1 has the potential to become one of the world's largest LNG projects and today's acquisition marks a further significant step by OVL/ONGC group towards the energy security of our country. OVL is delighted to partner with Anadarko and other project participants to develop this world-class asset," said Sudhir Vasudeva, chairman of OVL.
Bank of America Merrill Lynch is acting as an exclusive financial advisor, Simmons & Simmons as legal advisor, Ernst & Young as tax and accounting advisor and Robertson (UK) Ltd as technical advisor to OVL in this deal.
Area 1 is operated by Anadarko Moçambique Area 1 Limitada (a wholly owned indirect subsidiary of Anadarko) and is located in Mozambique's deepwater Rovuma Basin. The block contains the Prosperidade and Golfinho/Atum natural gas complexes that together hold an estimated 35 to 65 trillion cubic feet (Tcf) of recoverable natural gas resources.
Area 1 covers approximately 2.6 million acres in the deep-water Rovuma Basin in offshore Mozambique and represents the largest gas discovery in offshore East Africa. It also has the potential to become one of the world’s largest LNG producing hubs with the first LNG expected by 2018.
The Area 1 LNG project is strategically located to supply LNG to India at a competitive price. Participation of OVL and OIL in the project will facilitate LNG access to the growing Indian gas market.
(Edited by Joby Puthuparampil Johnson)