ONGC-OIL pay $2.475 bn to Videocon Group
New Delhi: State-owned Oil and Natural Gas Corp and Oil India Ltd Tuesday paid USD 2.475 billion to Videocon Group for acquiring 10 percent stake in a giant gas field off Mozambique.
ONGC Videsh Ltd (OVL), the overseas arm of state-run explorer Oil and Natural Gas Corp (ONGC), and Oil India (OIL) had jointly bought Videocon Group's 10 percent interest in the Rovuma Area-1 for USD 2.475 billion.
Additionally, OVL bought US energy major Anadarko Petroleum's 10 percent stake in the same block for USD 2.64 billion.
"The payments to Videocon were made today," said a source with direct knowledge of the development, adding that "payments to Anadarko will be made before February-end."
OVL raised about USD 1.5 billion in one-year bridge loans from foreign lenders to fund its part of the payment to Videocon while OIL raised USD 900 million in debt for its share.
The source said OVL will raise another USD 2.6 billion to fund the Anadarko payments.
Videocon, he said, was originally seeking over USD 2.8 billion for the 10 percent stake in the block that is estimated to hold a minimum of 35 trillion cubic feet (tcf) of gas reserves.
"Tough negotiations followed and we were able to bring down the price to USD 2.47 billion," he said.
A unit of Bharat Petroleum Corp Ltd (BPCL) already has a 10 percent stake in the block, which is estimated to hold a maximum of 65 tcf gas reserves, equivalent to 13 times the size of the currently producing fields in the KG-D6 block of Reliance Industries.
The resource accretion from this acquisition for 20 percent 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 source 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.
The acquisitions reflect the recent aggressiveness of Indian firms in securing energy assets abroad.
Area 1 has the potential to become 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.