Varun Industries, a Bombay Stock Exchange-listed mining, steel and oil and gas conglomerate, said on Tuesday that it would sell 51% stake in its onshore oil block at Madagascar to Da Qing Oilfield (Petro China subsidiary), a China-based oil company for $150 million (Rs 790 crore).
Varun Industries has formed a special purpose vehicle (SPV) —Sure King Varun Hong Kong — with Da Qing Oil Field, one of the leading oil companies in China, it said in a statement. Varun Industries would hold 49% in the SPV while Da Qing would hold majority stake.
Varun has signed a joint venture cooperation agreement with the Chinese firm for the stake sale, the statement added.
"Da Qing group has committed to pay $150 million as upfront money towards consideration to Varun Group for ceding 51% stake in the oil block," the statement added.
"This (entering a JV) is one of the major steps towards unlocking the value of our varied assets in Madagascar," said Kiran Mehta, chairman and managing director, Varun Industries Ltd.
The company said that the Madagascar block has an area of about 6,884 sq km.
The steel-to-mining company is currently working on extracting rare earth elements it found in Anosy region of Madagascar in July.
It recently announced discovery of 266.8 million tonnes of heavy minerals including rare earth from 10 blocks in Madagascar.
Shares of Varun closed 0.19%, or Rs 0.5, down at Rs 233.8 on the BSE on Tuesday.
with inputs from pti