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Updated: August 27, 2013 12:29 IST

OVL to pick up 10 % stake in Mozambique gas field

Sujay Mehdudia
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Sudhir Vasudeva.
The Hindu
Sudhir Vasudeva.

Oil and Natural Gas Corporation Videsh Ltd. (OVL), on Monday, announced that it would buy a 10 per cent stake in a giant Mozambique gas field from Anadarko Petroleum Corp of U.S. for $2.64 billion.

In a statement issued here, OVL said it had signed agreements to buy a 10 per cent stake from Anadarko in Mozambique's offshore Rovuma Area 1, where up to 65 trillion cubic feet of gas reserves are to be converted into LNG for transportation to markets like India. With this, OVL has transacted almost $11 billion in energy deals since last September . The company, along with Oil India Limited (OIL), had, in June, bought a 10 per cent stake in the same block from the Videocon Group for $2.475 billion. The deal has been approved by the Mozambique government but awaits clearance of the Indian government.

“As a result of both transactions, OVL will own a significant interest in this strategic project in Mozambique. Area 1 has potential to become one of the world's largest LNG projects, and the latest acquisition marks a further significant step by OVL/ONGC group towards the energy security of our country,” ONGC Chairman and Managing Director Sudhir Vasudeva said.

Anadarko will continue to be the operator of the block, with its stake reduced to 26.5 per cent from 36.5 per cent after the deal. The project, with capacity to produce 20 million tonnes of LNG annually, would be the world's largest export site after ExxonMobil-run Ras Laffan in Qatar.

A unit of Bharat Petroleum Corp Ltd. (BPCL) already has a 10 per cent interest in the Rovuma Area 1. The Area 1 LNG project is strategically located to supply LNG to India at a competitive price, the statement added. OVL has also acquired two blocks each in Columbia and Bangladesh, and is mulling exercising its pre-emption rights to block China's Sinochem Group from buying a 35 per cent interest in Brazilian oilfields for $1.54 billion.

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This is a good news assuming the gas field really pans out to its
promise of gas riches. But then there is always a risk in deals like and
that is a fact of life that India has to live with. If the Brazilian
field is prospective enough India should preempt Chinese company and
acquire the stake for the asking price. After all China has unfairly
snatched India's lucrative stake in Kazakh oil field even when a deal
was done between ConocoPhillips and OVL, that was a punch far below the

from:  Suvojit Dutta
Posted on: Aug 27, 2013 at 06:36 IST
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