India's ONGC to buy $2.64-billion stake in Anadarko Mozambique gas block
MUMBAI/NEW YORK (Reuters) - India's Oil and Natural Gas Corp (ONGC.NS: Quote) has agreed to buy 10 percent in a gas field offshore Mozambique from Anadarko Petroleum Corp for $2.64 billion, as the explorer looks to offset diminishing supplies from domestic gas fields by buying overseas assets.
The purchase of U.S. oil company Anadarko's (APC.N: Quote) stake is the latest in a handful of overseas assets that ONGC Videsh, the overseas business unit of state-controlled ONGC, has bought in the last couple of years to boost India's energy needs.
In June, ONGC and state-run Oil India Ltd (OILI.NS: Quote) signed a deal to buy a 10 percent stake in a Mozambique gas field from Videocon Group VEDI.NS for $2.48 billion.
"There is a lot of energy demand and whatever volumes of gas we are able to bring to the country are of utmost significance," A. K. Srinivasan, ONGC's group general manager for finance, told Reuters. "Mozambique will be a big LNG hub for the future."
Anadarko said it would remain the operator of Area 1, with a working interest of 26.5 percent in the block, which is located in Mozambique's deepwater Rovuma Basin.
Recent discoveries have turned the Rovuma field into a major draw for global energy producers and boosted Mozambique's natural gas reserves to around 150 trillion cubic feet or enough to supply Japan, the world's top LNG importer, for 35 years.
Rovuma has the potential to become one of the world's largest liquefied natural gas (LNG) producing hubs by 2018, and is strategically located to supply gas to India at competitive prices.
SEEN CLOSING BY MARCH 2014
ONGC, which expects the cash transaction to close by March 2014, is likely to finance the deal through internal cash balance and fresh borrowings, Srinivasan said, adding that financing details would be finalized over the next few months. Continued...