03-Oct-2013
The cabinet on Thursday approved state-run ONGC and Oil India's $5 billion deal to acquire 20% stake in a prolific Mozambique block, which is the biggest gas field in offshore east Africa, government officials said.
ONGC's foreign arm, ONGC Videsh announced acquisition of a 10% stake in the block for $2.64 billion in August, two months after it purchased a 10% stake in same block jointly with Oil India for $2.475 billion.
OVL and Oil India is expected to close the two multi-billion dollar deals by December this year, government and industry officials said. Companies are considering raising dollar loans to fund the acquisitions because overseas borrowings would be cheaper funding option after sharp devaluation of the rupee. The government is also encouraging state energy firms to fund foreign acquisitions with foreign debt instead of using their own cash reserves or though domestic loans so that they don't deplete India's foreign exchange reserves and put more pressure on the current account deficit, officials said.
After this acquisition, Indian companies would have 30% stake in the block, which has estimated recoverable reserves of 35-65 trillion cubic feet, officials said. State-run Bharat Petroleum Corp Ltd (BPCL) already holds a 10% stake in the block.
Post acquisition, Anadarko will remain the operator of the block with 26.5% stake. Other partners in the block will be Mitsui (20%), BPRL Ventures, a subsidiary of BPCLBSE 4.69 % (10%) and PTT Exploration & Production Plc (8.5%). Empresa Nacional de Hidrocarbonetos, E.P.'s 15% interest is carried through the exploration phase.
On June 25, ONGC and Oil India had signed a definitive agreement with the Videocon group to acquire a 10% stake in the Rovuma Area-1 offshore block for $2,475 million. Two months later, ONGC signed another agreement with the block's operator, Anadarko Corp, to acquire its 10% stake for $2,640 million.
Source:- economictimes.indiatimes.com
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