OREANDA-NEWS. ONGC Videsh Limited (“OVL”) has signed definitive agreements on 24th August 2013 with Anadarko Mocambique Area 1 Limitada (“Anadarko”) to acquire a direct 10% participating interest (“Interest”) in the Rovuma Area 1 Offshore Block in Mozambique (“Area 1”) for USD 2,640 million.

The acquisition is subject to the approvals of the Governments of Mozambique and India, relevant regulatory approvals, pre-emption rights and other customary conditions. The transaction is subject to usual closing conditions and has long stop date of 28th February 2014.

Today's acquisition of an additional 10% Interest in Area 1 follows our earlier announcement of a joint acquisition, with Oil India Limited (“OIL”), of an indirect 10% interest in Area 1, from Videocon Mauritius Energy Limited. BPRL Ventures Mozambique B.V. (“BPRL”), another Indian PSU already holds a 10% interest in Area 1.

Area 1 covers approximately 2.6 million acres in the deep-water Rovuma Basin offshore Mozambique and represents the largest gas discovery in offshore East Africa with estimated recoverable resources of 35 to 65 trillion cubic feet. The partners in Area 1 include Anadarko, operator of the project, ENH, Mitsui, BPRL, Videocon and PTTEP. Area 1 has the potential to become one of the world's largest LNG producing hubs.

The Area 1 LNG project is strategically located to supply LNG to India at a competitive price. Participation of Indian PSUs in the project will facilitate access of LNG to the growing Indian gas market. Indian PSUs would need to devote significant funding and technical resources to the development of the project, which will also enhance the strong links between Mozambique and India.

The acquisition of an interest in Area 1 would mark OVL's entry into this emerging world-class offshore gas basin with significant future upside potential, and is consistent with OVL's quest of adding high quality international assets to its existing E&P portfolio. The acquisition would increase OVL's reserve and resource base significantly. The project would also be an important milestone in reaching OVL's long-term production targets of 20 MMTOE by FY'18 and 60 MMTOE by FY'30.

“We are very pleased to have agreed with Anadarko the terms to acquire a direct 10% Interest in Area 1 to add to the 10% interest OVL has agreed to jointly acquire with OIL recently. As a result of both transactions, OVL will own a significant interest in this strategic project in Mozambique. Area 1 has potential to become one of the world's largest LNG projects and today's acquisition marks a further significant step by OVL/ONGC group towards the energy security of our country. OVL is delighted to partner with Anadarko and other project participants to develop this world-class asset”, said Mr Sudhir Vasudeva, Chairman, OVL.

Bank of America Merrill Lynch is acting as exclusive financial adviser, Simmons & Simmons as legal adviser, Ernst & Young as tax and accounting adviser and Robertson (UK) Limited - a CGG company, as technical adviser to OVL.