Varun Industries, a diversified company with a presence in the steel-ware, mining and oil and natural gas business, on Tuesday said it would sell a 51 per cent stake in an onshore oil block in Madagascar to Petro China subsidiary Da Qing Oil Field Company for $150 million.
“Da Qing Group has committed to arrange for oil exploration and necessary fund-raising process for the programme. They have committed to pay $150 million as upfront money toward consideration to Varun Group for ceding its 51 per cent stake in the oil block,” the Mumbai-based firm said in a statement.
Varun has signed a joint venture cooperation agreement with the Chinese firm for the stake sale, the statement added.
The oil exploration block held by Varun Industries is spread over 6,884 sq. km. and holds prospective reserves of around 3,067 million barrels of oil.
“This is one of the major steps toward unlocking the value of our varied assets in Madagascar. This development gives us the confidence and strength to nurture and develop our other Madagascar assets,” company Chairman Kiran Mehta said while talking about the stake sale to the Chinese firm. “We will continue to hold a 49 per cent stake in the joint venture.
“The money for oil exploration in the block will be invested by the Chinese partner,” a company spokesperson later said.
