The Oil ministry has reportedly sought several details from ONGC regarding its purchase of Videocon Group’s 10 percent stake in a Mozambique gas field after allegations that ONGC may have overpaid about $200 million.
The state-run oil and gas giant had in 2013 acquired the stake in Videocon Group’s Offshore Area 1 through its overseas arm, ONGC Videsh Ltd (OVL), for approximately $2.48 billion. Earlier in August 2012, when Thailand’s PTT Exploration and Production acquired London-based Cove Energy, which had 8.5 percent stake in Mozambique’s Rovuma Area 1, the asset was valued at around $1.9 billion.
It is understood that Videocon, citing PTT’s acquisition of Cove at that time, was willing to sell its 10 percent stake to OVL at a small premium for about $2.3 billion. However, ONGC ended paying $2.48 billion to Videocon a year later for the stake.
Later in 2014, ONGC purchased another 10 percent stake in the same energy block from Anadarko Corp, which currently has 26.5 percent stake and is the operator of the block, for $2.64 billion.
OVL had followed up the Videocon purchase by buying another 10 per cent stake in the same Offshore Area 1 of Mozambique from US energy major Anadarko Corp for $2.64 billion in 2014. Anadarko disclosed in its annual filings with the SEC in 2015 that it made a gain of $1.5 billion from the sale of 10 percent interest in Offshore Area 1.
Senior ONGC officials admitted that the queries from the ministry also include the basis of the valuing the stake purchase, apart from other details. However, the company has vehemently denied such charges.
The Mozambique gas field is expected to contain about 75 trillion cubic feet of gas reserves. In addition to ONGC, Oil India and Bharat Petroleum also have stakes in the field.
Shares of ONGC last traded at Rs 193.40, up 0.25 percent on the BSE.
Source: International Business Times
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