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ONGC Videsh (OVL) and Oil India Limited (OIL) have signed a definitive agreement with Videocon Mauritius Energy to acquire its 100 per cent shares in Videocon Mozambique Rovuma 1 Limited gas field for US$2.47bn

Videocon Mauritius Energy currently holds 10 per cent participating interest in the Rovuma Area 1 Offshore Block (Area 1) in Mozambique.

The acquisition is expected to be implemented via a newly incorporated entity, in which OVL and OIL are expected to hold a 60 per cent and 40 per cent stake respectively. The acquisition, however, is subject to the approvals of the governments of Mozambique and India.

The deal transaction is expected to close in Q4 2013.

Area 1 covers approximately 2.6mn acres in the deep-water Rovuma Basin offshore Mozambique and represents the largest gas discovery offshore East Africa with an estimated recoverable reserves of 991bn cubic metres to 1.8 trillion cubic metres.

Area 1 has the potential to become one of the world’s largest LNG producing hubs by 2018, according to industry sources.

The project is said to be strategically located to supply LNG to India at a competitive price.
OVL and OIL are also expected to devote significant funding and technical resources to the development of the project.

Sudhir Vasudeva, chairman, OVL, said, “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.”

The acquisition would mark OVL’s entry into this emerging world-class offshore gas basin with significant future upside potential, Vasudeva added.

The partners in the block include Anadarko, operator of the project, Portugal’s ENH, Mitsui, Bharat Petroleum Corporation Limited (BPCL) and Thailand’s PTTEP.