ONGC, Oil India make joint bid for Mozambique gas stake: Source

NEW DELHI: State-owned Oil and Natural Gas Corp (ONGC) and Oil India LtdBSE -0.73 % (OIL) today made a joint bid to acquire up to 20 per cent stake in a gaint Mozambique gas field.

While ONGC Videsh Ltd, the overseas arm of India's biggest explorer, and OIL made a joint bid for the stake offered by US explorer Anadarko Petroleum Corp andVideoconBSE 2.43 % Group, state gas utility GAIL India shunned the offer as it felt the asking price of around $4 billion was too high.

Sources privy to the development said OVL-OIL have made a non-bidding offer at the close of deadline today.

Videocon and Anadarko are running almost common auction process but will do separate sale transaction for selling stake in the Mozambique's offshore Area 1, which may hold as much as 70 Trillion cubic feet of gas resources.

Anadarko is the operator of the block with 36.5 per cent stake while Videocon and a unit of Bharat Petroleum Corp Ltd ( BPCLBSE 1.51 %) hold 10 per cent stake each. Japan's Mitsui & Co Ltd is the second-biggest stakeholder with a 20 per cent interest.

Thai state oil company PTT Exploration and Production PCL has an 8.5 per cent interest and Mozambique's state-owned ENH 15 per cent.

Sources said while Videocon has put on offer all of its stake to cut its debt, Anadarko is wanting to reduce its holding to 26.5 per cent.

It wasn't however immediately clear if OVL-OIL combine have made a single offer or have made separate offers to Anadarko and Videocon.

The gas found in Offshore Area 1 is to be turned into liquefied natural gas (LNG) and shipped to markets like India. The plant in the Cabo Delgado province in northern Mozambique, is scheduled to start operating in 2018 with a capacity of 20 million tonnes of LNG per year.

The capacity will be split evenly between operators of Offshore Area-1 and Italian giant Eni, which is developing gas found in the neighbouring Offshore Area 4.

Two major natural gas discoveries have so far been made in Offshore Area 1 of Mozambique's Rovuma Basin. The Prosperidade complex is estimated to hold between 17 and 30-plus Tcf of recoverable natural gas while separate and distinct Golfinho/Atum complex is estimated to hold 15-35 Tcf of recoverable natural gas resources.

Evaluation of a third discovery on the block, Tubarao, is ongoing with an appraisal well that is expected to be drilled in early 2013.