ONGC Videsh Ltd, overseas arm of state-run explorer Oil and Natural Gas Corp, said on Monday it will buy US energy major Anadarko Petroleum Corp's 10 per cent stake in an offshore gas field in Mozambique for $2.64 billion in cash.
The deal for Mozambique's offshore Area 1 is expected to close around the end of this year.
OVL, along with Oil India Ltd, had in June agreed to buy Videocon Group's 10 per cent in the same block for $2.48 billion.
Anadarko will remain the operator of Area 1 with a working interest of 26.5 per cent in the block, which is located in Mozambique's deepwater Rovuma Basin.
"OVL has signed definitive agreements on August 24 with Anadarko Moçambique Area 1 Limitada (Anadarko) to acquire a direct 10 per cent participating interest in the Rovuma Area 1 Offshore Block in Mozambique for $2.64 billion," a company statement said in New Delhi.
The acquisition is subject to the approvals of the governments of Mozambique and India, relevant regulatory approvals, pre-emption rights and other customary conditions.
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.
"Area 1 has the potential to become one of the world’s largest LNG producing hubs," it said.
"The Area 1 LNG project is strategically located to supply LNG to India at a competitive price."
Participation of Indian public sector units in the project will facilitate access of liquefied natural gas 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.
Bank of America Merrill Lynch advised OVL on the transaction while Simmons & Simmons were its legal adviser. Ernst & Young was its tax and accounting adviser and Robertson (UK) Limited – a CGG company, as technical adviser to OVL.