Oil and Natural Gas Corporation (ONGC) and Oil India Ltd. (OIL), on Tuesday, said they would buy Videocon Industries’ 10 per cent stake in Mozambique gas field for $2.5 billion.

“ONGC Videsh Ltd. (OVL) and OIL have signed definitive agreements in Singapore on June 25 with Videocon Mauritius Energy Ltd. to acquire 100 per cent of shares in Videocon Mozambique Rovuma 1 Ltd., the company holding a 10 per cent participating interest in the Rovuma Area 1 Offshore Block in Mozambique (Area 1) for $2,475 million,” ONGC said in a statement.

ONGC Videsh is the overseas arm of ONGC.

“Considering the growing importance of natural gas in the primary energy basket, this acquisition is a significant step by OVL/ONGC group towards the energy security of our country,” Sudhir Vasudeva, Chairman, OVL, said.

The acquisition will be implemented through a newly incorporated joint venture, in which OVL will hold 60 per cent stake, and OIL the remaining 40 per cent. The transaction is expected to close in the fourth quarter of 2013.

The acquisition is subject to the approvals of the Governments of Mozambique and India, relevant regulatory approvals, pre-emption rights, and other customary conditions.

NGC said this acquisition marks OVL’s entry into “this emerging world-class offshore gas basin with significant future upside potential”.

The project would also be important in reaching OVL’s long-term production targets of 20 MMTOE (million metric tonnes of oil equivalent) by 2017-18 and 60 MMTOE by 2029-30, it added.

It is estimated that Area 1, which covers about 2.6 million acres in the deep-water Rovuma Basin offshore Mozambique, holds estimated recoverable reserves of 35-65 trillion cubic feet and has the potential to become one of the world’s largest LNG producing hubs with first LNG expected by 2018.

Shares of ONGC closed at Rs.61 apiece on the BSE, 5.63 per cent higher that its previous close. OIL ended lower by 2.10 per cent at Rs.544.20.

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