ONGC, Oil India Agree to $2.5 Billion Mozambique Field Stake

Oil & Natural Gas Corp. (ONGC) and Oil India Ltd. (OINL), India’s biggest state-run explorers, will pay $2.5 billion to buy a stake in a Mozambique natural gas field from Videocon Industries Ltd. (VCLF)

The two Indian companies will buy Videocon Mozambique Rovuma 1 Ltd., which owns 10 percent of the Rovuma-1 field in the waters off the African nation, Oil India said today in a stock exchange filing. The transaction, expected to close in the last quarter of 2013, was first announced by ONGC on June 10 and withdrawn the same day for being “premature.”

ONGC has acquired $8.5 billion of oil and gas assets outside India since September as it seeks to raise overseas production more than sixfold by 2030 and reduce the south Asian nation’s dependence on imports. The New Delhi-based company plans to spend 11 trillion rupees ($184 billion) by 2030 to add reserves in India and overseas and reverse a decline in output from aging fields at home.

The two state-run companies will form a venture for the acquisition, which is subject to the approval of both the Indian and Mozambique governments and their regulators, as well as clearance from existing partners in the Rovuma-1 area.

ONGC rose 4.2 percent, the most since Jan. 18, to 311.40 rupees at the close in Mumbai, while Oil India fell 1.5 percent to 545.50 rupees. The benchmark S&P BSE Sensex (SENSEX) index gained 0.5 percent.

Leading Efforts

Anadarko Petroleum Corp. (APC) and Eni SpA have been leading the effort to convert gas from the Indian Ocean fields in Mozambique to liquid and transport it to countries including India via tankers. Liquefied natural gas plants need billions of dollars in investment to chill the gas to a liquid and ship it using tankers. The East African country has become a prominent destination for energy investment, especially by Asian companies, as it looks to develop the largest natural-gas discovery in a decade.

At a planned capacity of 20 million tons annually, the Mozambique project could be the world’s largest LNG export site after Ras Laffan in Qatar, where Exxon Mobil Corp. (XOM) is a partner.

Bank of America Corp. was the financial adviser to the buyers. Videocon was advised by Standard Chartered Plc, Credit Suisse Group AG and UBS AG.

To contact the reporter on this story: Rakteem Katakey in New Delhi at rkatakey@bloomberg.net

To contact the editor responsible for this story: Jason Rogers at jrogers73@bloomberg.net

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