OVL, OIL Buy Mozambique Gas Field Stake For $2.48 Bn
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ONGC Videsh Limited (OVL), subsidiary of state-run ONGC, and Oil India have signed an agreement to buy a 10 per cent stake in a Mozambique gas field from Videocon Group for $2.48 billion, the state companies said.
ONGC, which faces diminishing supplies from its ageing oil and gas fields in India and has been buying interests in overseas assets, announced the deal earlier this
month but later withdrew the statement. "This acquisition is a significant step towards the energy security of our country," ONGC Chairman Sudhir Vasudeva said in a statement on 25 June' 2013.
Demand for gas in Asia's third-largest economy far outstrips production, as India's need to keep prices cheap for strategic industries deters investment in costly producing areas and in pipelines and terminals for more expensive LNG.
India, the world's fourth-largest energy consumer, uses coal for nearly 56 per cent of its energy needs, while oil accounts for another 26 per cent. It aims to double the portion of gas in its energy mix to 20 per cent by 2020.
Recent discoveries have turned Mozambique's 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.
The Rovuma field has the potential to become one of the world's largest liquefied natural gas (LNG) producing hubs by 2018 and is located close to the India market.
Anadarko Petroleum Corp, the operator of Rovuma's Area 1 block in which it holds a 36.5 per cent stake, and Videocon had each launched an auction of a
10 per cent stake in the block earlier this year. The two Indian state companies have also bid a similar amount for Anadarko's 10 per cent stake, a source with direct knowledge of the matter told Reuters earlier this month.
At 3:00 p.m., shares in ONGC were up 4.6 per cent, compared with a 0.8 per cent gain in the broader Mumbai market. Videocon shares were trading 3.7 per cent lower.