ONGC rallies as arm OVL, OIL India ink pact with Videocon for Mozambique gas field

MUMBAI: Oil and gas major ONGC’s subsidiary ONGC Videsh ( OVL) and Oil India have signed pact with Videocon Industries to buy its stake in Mozambique gas field for $2.47 billion.

At 01:25 p.m.; the ONGC was at Rs 311.65, up 4.28 per cent, Oil India slipped 0.17 per cent and Videocon was down 1.40 per cent.

The acquisition is expected to be done via SPV jointly owned by Oil India & OVL. The deal is expected to be closed by Q4 2013.

Shares of ONGC gained momentum in trade after the announcement.

Oil India will be buying 40 per cent stake in Mozambique gas field while OVL will hold 60 per cent stake.

OVL will look at transporting LNG from Mozambique to India. The management has said that it has significant cash on the books and will pay about $1.48 billion to fund the acquisition. It expects first tranche of LNG from Mozambique to come by 2018.

The reserves in Mozambique gas field are at 35-65 tcf.