India’s ONGC Ltd. is eyeing what would be a multi-billion dollar acquisition of fellow Indian player Videocon Industries Ltd. (VIL)’s 10% stake in the high-profile Offshore Area 1 deepwater block in the Rovuma Basin offshore Mozambique – one of the most highly prospective and still largely underexplored areas in the world.
The block has produced a series of giant gas discoveries, with estimated recoverable reserves of between 35-65 Tcf. The state-run explorer has initiated talks with Mumbai-based VIL to acquire the stake, DI understands. ONGC Chairman and managing director Sudhir Vasudeva confirmed the talks with Videocon but refused to disclose the details. “It is true that we are looking at it (Mozambique block),” he said.
Videocon is willing to sell its stake in the block, with VIL chairman and managing director, Venugopal Dhoot saying: “Our board of directors has decided to sell the Mozambique stake. We have appointed Standard Chartered Bank as our selling agent.” It is understood the selling price could be upwards of US $3 Bn.
VIL’s board of directors has approved a proposal to sell between 10-15% of its upstream portfolio spread across Australia, India, Indonesia, Mozambique and Brazil to raise funds for new E&P projects. The Mozambique stake has been put up for sale in the wake of the large gas discoveries made in Area I, and the resultant increased interest in the acquisition of a potential stake by several majors.
Videocon is reckoning on a price higher than that achieved by Cove Energy when it sold its 8.5% stake in Area I. The UK-based independent sold its stake for US $2.2 Bn to Thailand’s PTTEP last year. “A lot of developments have taken place in the Mozambique block after Cove Energy’s stake sale. A huge gas reserve was found,” said Dhoot.
He was referring to finds made by operator Anadarko Petroleum that make up its planned 4-train Prosperidade development, which will see multi-billion dollar investments in an onshore/offshore LNG project in northern Mozambique, done in sync with Italian Eni’s development of its Mamba Complex in neighbouring Offshore Area 4 (see related story, page 6). Offshore Area 1 also has Anadarko’s Golfinho/Atum complex.
The acquisition would increase India’s overall holding in Offshore Area 1 to 20%, possibly giving it a greater say in the management of the assets. The country’s state-run Baharat Petroleum Corporation Ltd. (BPCL) currently owns a 10% interest in the block.
The equity-holding would help ONGC in sourcing LNG for its planned LNG import terminal at Mangalore Port. ONGC has already organised BPCL and Japan’s Mitsui & Co (which holds a 20% stake in Area 1) as partners for the Mangalore LNG import project. “We will be signing a memorandum of understanding with Bharat Petroleum Corporation for the Mangalore LNG project soon,” added Vasudeva. The proposed LNG terminal would include Mitsui as a partner, he added.
The acquisition of the Mozambique stake would also be in line with the company’s plan to increase oil and gas output from overseas assets by sevenfold by 2030.
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