ONGC, Oil India to Pay $2.5 Billion for Mozambique Field Stake

June 25, 2013

Africa, Business, International

ONGC, Oil India to Pay $2.5 Billion for Mozambique Field Stake

By Rakteem Katakey
Bloomberg

Oil & Natural Gas Corp. (ONGC) and Oil India Ltd. (OINL), India’s biggest state-run explorers, will pay $2.5 billion to buy a stake in a Mozambique natural gas field from Videocon Industries Ltd. (VCLF)

The two Indian companies will buy Videocon Mozambique Rovuma 1 Ltd., which owns 10 percent of the Rovuma-1 field in the waters off the African nation, Oil India said today in a stock exchange filing. The transaction, expected to close in the last quarter of 2013, was first announced by ONGC on June 10 and withdrawn the same day for being “premature.”

ONGC has acquired $8.5 billion of oil and gas assets outside India since September as it seeks to raise overseas production more than sixfold by 2030 and reduce the south Asian nation’s dependence on imports. The New Delhi-based company plans to spend 11 trillion rupees ($184 billion) by 2030 to add reserves in India and overseas and reverse a decline in output from ageing fields at home.

The two state-run companies will form a venture for the acquisition, which is subject to the approval of both the Indian and Mozambique governments and their regulators, as well as clearance from existing partners in the Rovuma-1 area.

ONGC shares rose as much as 4.7 percent to 312.75 rupees and traded 4.4 percent higher at 312 rupees as of 1:14 p.m. in Mumbai. Oil India fell 0.3 percent to 552.45 rupees. The benchmark S&P BSE Sensex (SENSEX) index gained 1.1 percent.

Anadarko Petroleum Corp. (APC) and Eni SpA have been leading the effort to convert gas from the Indian Ocean fields in Mozambique to liquid and transport it to countries including India via tankers. Liquefied natural gas plants need billions of dollars in investment to chill the gas to a liquid and ship it using tankers. The East African country has become a prominent destination for energy investment, especially by Asian companies, as it looks to develop the largest natural-gas discovery in a decade.

At a planned capacity of 20 million tons annually, the Mozambique project could be the world’s largest LNG export site after Ras Laffan in Qatar, where Exxon Mobil Corp. (XOM) is a partner.

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Video: Mozambique Basin : ONGC-Oil India To Buy Videocon’s Stake

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Video: Mozambique’s oil & gas sector

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Video: Mozambique’s oil and Italy

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OINL
On February 18, 1959, Oil India Private Limited was incorporated to expand and develop the newly discovered oil fields of Naharkatiya and Moran in the Indian North East. In 1961, it became a joint venture company between the Indian Government and Burmah Oil Company Limited, UK.

In 1981, OIL became a wholly-owned Government of India enterprise. Today, OIL is a premier Indian National Oil Company engaged in the business of exploration, development and production of crude oil and natural gas, transportation of crude oil and production of LPG. OIL also provides various E&P related services and holds 26% equity in Numaligarh Refinery Limited.

Source: OINL

ONGC

Today, Oil and Natural Gas Corporation Ltd. (ONGC) is, the leader in Exploration & Production (E&P) activities in India having 72% contribution to India’s total production of crude oil and 48% of natural gas.

During pre-independence, the Assam Oil Company in the North-Eastern and Attock Oil company in North-Western part of undivided India were the only oil companies producing oil in the country. The major part of Indian sedimentary basins was deemed to be unfit for development of oil and gas resources.

After independence, the Government realized the importance of oil and gas for rapid industrial development and its strategic role in defence. Consequently, while framing the Industrial Policy Statement of 1948, the development of the hydrocarbon industry in the country was considered to be of utmost necessity.

Until 1955, private oil companies mainly carried out exploration of hydrocarbon resources of India. Assam Oil Company was producing oil at Digboi, Assam (discovered in 1889) and the Oil India Ltd. (a 50% joint venture between Government of India and Burmah Oil Company) was engaged in developing two fields Naharkatiya and Moran in Assam. In West Bengal, the Indo-Stanvac Petroleum project (a joint venture between Government of India and Standard Vacuum Oil Company of USA) was engaged in exploration work. The vast sedimentary tract in other parts of India and adjoining offshore remained largely unexplored.

n 1955, Government of India decided to develop the oil and natural gas resources in the various regions of the country as part of Public Sector development. With this objective, an Oil and Natural Gas Directorate was set up in 1955 under the then Ministry of Natural Resources and Scientific Research. The department was constituted with a nucleus of geoscientists from the Geological survey of India.

A delegation under the leadership of Mr. K D Malviya, the then Minister of Natural Resources, visited several countries to study the oil industry and to facilitate the training of Indian professionals for exploring potential oil and gas reserves. Foreign experts from USA, West Germany, Romania and erstwhile USSR visited India and helped the government with their expertise. Finally, the visiting Soviet experts drew up a detailed plan for geological and geophysical surveys and drilling operations to be carried out in the 2ndFive Year Plan (1956-57 to 1960-61).

In April 1956, the Government of India adopted the Industrial Policy Resolution, which placed mineral oil industry amongst the Schedule ‘A’ industries, the future development of which was to be the sole and exclusive responsibility of the state.

Soon, after the formation of the Oil and Natural Gas Directorate, it became apparent that it would not be possible for the Directorate with limited financial and administrative powers to function efficiently. So in August, 1956, the Directorate was raised to the status of a commission with enhanced powers, although it continued to be under the government.

In October 1959, the Commission was converted into a statutory body by an act of Parliament, which enhanced powers of the commission further. The main functions of the Oil and Natural Gas Commission subject to the provisions of the Act, were “to plan, promote, organize and implement programmes for development of Petroleum Resources and the production and sale of petroleum and petroleum products produced by it, and to perform such other functions as the Central Government may, from time to time, assign to it”. The act further outlined the activities and steps to be taken by ONGC in fulfilling its mandate.

Source:  ONGC

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