Indian companies plans to secure funding abroad to buy stake in Mozambican oil block

26 April 2013

ONGC Videsh Ltd (OVL), of Indian group Oil and Natural Gas Corp (ONGC) and Oil India Ltd (OIL) are negotiating with international banks to issue foreign currency bonds to raise US$5 billion to acquire 20 percent of a gas block in Mozambique, the Indian press reported.

The two stakes of 10 percent each are being sold by US group Anadarko Petroleum, the operator of the Area 1 block, with a total stake of 36.5%, and India’s Videocon Industries, with a total of 10 percent. The Indian press reported that OVL, for example, had hired Citibank, Deutsche Bank and the Royal Bank of Scotland to secure US$1 billion.

The oil block in Mozambique is essential for OVL given that recent attempts to buy an oil field in Kazakhstan are likely to fail, as the local government is expected to sell the stake to a Chinese company, which US company ConocoPhillips had previously agreed to sell to the Indian company.

The Indian press also reported that if the two companies had decide to join forces in this deal to buy the 20 percent stake, Indian groups would own 30 percent of the gas block as Bharat Petroleum already owns 10 percent and the US group would see its total stake drop to 26.5 percent.

The Area 1 block, in the Rovuma basin, in northern Mozambique, is operated by Anadarko Petroleum (36.5 percent), and the remaining partners are Japan’s Mitsui & Co., with 20 percent, India’s Bharat Petroleum Corporation Limited and Videocon, with 10 percent each, Mozambique’s ENH has 15 percent and Thailand’s PTT, which owns 8.5 percent. (macauhub)