ONGC’s stake buy in Mozambique saw seller reap $1.5 bn profit

PTI New Delhi | Updated on January 23, 2018 Published on April 12, 2015

State-owned Oil and Natural Gas Corp’s (ONGC) acquisition of 10 per cent stake in a giant Mozambique gas field had helped the seller make a neat profit of USD 1.5 billion or over 62 per cent of the purchase price.

ONGC had in June 2013 bought 10 per cent stake in the Offshore Area 1 from Videocon Group for USD 2.475 billion and followed it up with another 10 per cent stake buy from US energy major Anadarko Corp for USD 2.64 billion last year.

Anadarko in its annual filings with the US Securities and Exchange Commission said it made a “gain” of USD 1.5 billion from the sale of 10 per cent interest in Offshore Area 1.

Under the head ‘Divestitures’, the company said it made net gains of USD 1.891 billion from sale of stakes in 2014.

“The 2014 proceeds and net gains were primarily related to assets included in the oil and gas exploration and production reporting segment. The company sold a 10 per cent working interest in Offshore Area 1 in Mozambique for USD 2.64 billion, recognising a gain of USD 1.5 billion,” it said.

The other gains came from sale of its Chinese subsidiary and interest in a Gulf of Mexico block.

Woodlands, Texas—based energy—exploration company Anadarko continues to be the operator of the block, with its stake reduced to 26.5 per cent from 36.5 per cent after the deal.

ONGC Videsh Ltd, the overseas investment arm of ONGC, had split the 10 per cent stake it bought from Videocon for USD 2.475 billion with Oil India Ltd (OIL) in 60:40 ratio.

So, OVL now has 16 per cent stake in Offshore Area 1, which holds as much as 75 Trillion cubic feet of gas reserves.

OIL has 4 per cent and a unit of Bharat Petroleum Corp Ltd (BPCL) another 10 per cent.

Other partners in Area 1 include Mitsui with 20 per cent stake, ENH (15 per cent) and PTTEP (8.5 per cent).

Gas from the block is to be converted into liquefied natural gas (LNG) for transportation by ships to markets like India. Indian firms will have access to 30 per cent of 60—80 million standard cubic meters per day of planned gas production from the block.

About USD 18.4 billion will be required to bring the first set of finds to production and convert it into LNG.

The Area—1 consortium is focused in looking at bringing first gas by 2019, sources said.

So far, seven gas fields have been discovered in the block. Of these, three fields — Lagosta, Windjammer and Barquentine (collectively called the Prosperidade field) — extend into the adjacent Block Area—4 where Italy’s ENI with a 70 per stake is the operator.

The others — Atum, Golfinho and a small field Tubarao, are independent fields lying fully in Block Area—1.

Sources said the consortium is looking at developing the independent fields first.

Published on April 12, 2015

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