ONGC Videsh (OVL) and Oil India will split equally the 10 per cent stake they acquired in a giant Mozambique gas field
from Videocon Group for $2.475 billion.
OVL, the overseas arm of state-owned Oil and Natural Gas Corp (ONGC), and OIL had jointly bought Videocon Group's 10 per cent interest in the Rovuma Area-1 for $2.475 billion.
This stake was originally envisaged to be split in 60:40 ratio with OVL getting the larger share.
But with OVL on its own buying US energy major Anadarko Petroleum's 10 per cent stake in the same block for $2.64 billion, the Videocon stake will be split 50:50, a top official in the consortium said.
"We had decided that in case OVL is successful in buying Anadarko's 10 per cent stake, then the Videocon's shares will be split 50:50 and not 60:40," the official said. "This was a pre-decided arrangement."
Videocon, he said, was originally seeking over $2.8 billion
for the 10 per cent stake in the block that is estimated to hold a minimum of 35 trillion cubic feet of gas reserves.
"Tough negotiations followed and we were able to bring down the price to $2.47 billion," he said.
A unit of Bharat Petroleum Corp Ltd (BPCL) already has a 10 per cent stake in the block which is estimated to hold a maximum of 65 Tcf gas reserves which are equal to 13 fields of the size of currently producing fields in KG-D6 block of Reliance Industries.
The resource accretion from this acquisition for 20 per cent interest would be around 10 Tcf which is about one-fifth of India's present proven gas reserves.
"This acquisition will help us meet our energy needs as gas in the block will be turned into LNG for sale into markets like India," the official said.
The two transactions are to close by 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 Tcf.
The acquisitions reflect the recent aggressiveness of Indian firms in securing energy assets abroad.
Area 1 has the potential to be one of the world's largest LNG producing hubs. "It is also ideally suited to supply LNG to India at a competitive price due to its location," he said.