ONGC withdraws deal of stake in Mozambique gas
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ONGC withdraws deal of stake in Mozambique gas

ONGC withdrew a statement issued today saying it and Oil India Ltd had signed an agreement to buy a 10% stake in a Mozambique gas field from Videocon Group for $2.48 billion.

business Updated: Jun 11, 2013 08:28 IST

ONGC withdrew a statement issued on Monday saying it and Oil India Ltd had signed an agreement to buy a 10% stake in a Mozambique gas field from Videocon Group for $2.48 billion.

The company did not give the reason for the withdrawal but a company source said the announcement of the deal had been accidentally issued prematurely.

Two sources with direct knowledge of the situation said the deal was still on track and the formal announcement was likely to be made in the next couple of days.

Separately, a source with direct knowledge said the two Indian state energy companies had also bid a similar amount for a 10% stake in the Rovuma offshore field from US-based Anadarko Petroleum Corp (APC.N), which has a 36.5% stake in the field and is the operator.

Videocon, a conglomerate controlled by tycoon Venugopal Dhoot, paid $75 million for the Rovuma 1 stake in 2008 - before gas finds vastly increased its value and it emerged as a major supply base with potential to export into energy-hungry Asia.

The original announcement by ONGC on Monday said it had been represented in the deal by its ONGC Videsh Ltd(OVL) unit, its overseas operations arm.

"ONGC regrets to announce that the Press Release titled 'OVL and OIL sign definitive agreement to acquire interest in the Rovuma Area 1 Offshore Block in Mozambique' has been inadvertently issued. The above-referred Release stands withdrawn," it said in a statement.

Explorer Oil & Natural Gas Corp (ONGC), faces diminishing supplies from its ageing oil and gas fields in India and has been buying interests in overseas assets.

The $2.48 billion price, mentioned in the withdrawn announcement, is roughly in line with market expectations.

Anadarko and Videocon had each launched an auction of their respective 10 percent stakes in the Mozambique field earlier this year.

The field has the potential to become one of the world's largest liquefied natural gas (LNG) producing hubs by 2018, and is strategically located to supply gas to India at competitive prices, the withdrawn statement said.

Recent discoveries have turned the Rovuma offshore field into a major draw for global energy producers and boosted Mozambique's gas reserves to around 150 trillion cubic feet, enough to supply world number-one LNG importer Japan for 35 years.

After Anadarko, Japan's Mitsui & Co Ltd is the second-biggest holder in Mozambique's offshore Area 1 block, with a 20 percent stake.

Indian state refiner Bharat Petroleum Corp Ltd (BPCL.NS) owns 10% while Thai state oil company PTT Exploration and Production PCL has an 8.5% interest and Mozambique's state-owned ENH 15%.

The remaining 10% is the stake being offered by the unit of Dhoot's Videocon Industries (VEDI.NS). The company is expected to use some of the sale proceeds to pare debt of more than $5.5 billion.

Last year, PTT trumped Royal Dutch Shell Plc in a hotly contested battle for Cove Energy Plc and its 8.5 percent of the Mozambique field, paying $1.9 billion.

First Published: Jun 10, 2013 22:53 IST