The two Indian companies have created a joint venture to buy the 10% stake in which ONGC Videsh – the international arm of state firm Oil and Natural Gas Corporation – will hold 60% and Oil India 40%.
“Area 1 has the potential to become one of the world’s largest liquefied natural gas-producing hubs by 2018,” the Indian companies said, adding that the project was strategically located for providing LNG to India at competitive rates.
ONGC Videsh chairman Sudhir Vasudeva said that “considering the growing importance of natural gas in the primary energy basket, this acquisition is a significant step…towards the energy security of our country”.
The pending acquisition is expected to close in the fourth quarter subject to approvals.
The Indian duo said that the Rovuma Basin block represented East Africa’s largest gas discovery, with estimated recoverable reserves of between 35 trillion and 65 trillion cubic feet of natural gas.
Anadarko Petroleum holds a 36.5% stake in Area 1 along with partners Mitsui on 20%, Bharat Petroleum on 10%, Thailand’s PTT Exploration & Production on 8.5% and with state player Empresa Nacional De Hidrocarbonetos, ENH, holding a 15% interest carried through the exploration phase.
In March Anadarko Petroleum and Videocon Industries put 20% of the block up for auction, with each contributing 10%. ONGC and Oil India had first been rumoured to have jointly bid for 20% of the block.
Other companies said to have been interested in the offering include Shell, ExxonMobil and PetroChina.