International law firm Simmons & Simmons has advised ONGC Videsh Limited (“OVL”) on the US$2.64 billion acquisition of the ten percent participating interest (“Acquisition”) in the Rovuma Offshore Block in Mozambique (“Area 1”), from Anadarko Moçambique Area 1 Limitada (“Anadarko”), a wholly owned indirect subsidiary of Anadarko Petroleum Corporation.
This Acquisition marks ONGC’s second substantial acquisition of participating interest in Area 1. In June 2013, OVL and Oil India Limited (“OIL”) entered into an agreement with Videocon Mauritius Energy Limited to jointly acquire Videocon Mozambique Rovuma 1 Limited, the company holding a ten percent participating interest in Area 1. Simmons & Simmons was also the legal advisor to OVL and OIL for that transaction.
The Acquisition is subject to the approvals of the Governments of Mozambique and India, relevant regulatory approvals, pre-emption rights and other customary conditions.
Area 1 is estimated to have recoverable reserves of 35 to 65 trillion cubic feet, which represents the largest gas discovery in East Africa. A LNG project is being planned to export gas produced from Area 1 and its adjacent block, with the first LNG expected by 2018. Once completed, Area 1 has the potential to become one of the world’s largest LNG producing hubs. The partners in Area 1 include Anadarko, operator of the project (Anadarko will remain the operator of Area 1 with a working interest of 26.5 percent following the completion of the Acquisition), ENH, Mitsui, BPRL and PTTEP.
The Simmons & Simmons team was led by Hong Kong partners Vivien Yang and Ian Wood, with assistance from associates in our Hong Kong, Beijing, Singapore, Dubai and London offices, including Hong Kong-based associates Matthew Davis, Liz Hsu, Moven Liu and Pamela Leong.
Commenting on the transaction, Vivien Yang said: “We are pleased to have advised OVL on both of its two recent acquisitions of interests in Area 1. This newly announced transaction shows OVL’s further commitment to invest and contribute to the development of the natural gas and LNG industries in Mozambique, the success of which will benefit both Mozambique as a LNG producing country and India as a potential LNG offtaker and a stakeholder of Area 1.”
Vivien continued “With the interests acquired from Anadarko and Videocon, Area 1 will become OVL’s most promising and largest investment in gas prospects.”
Ian Wood, added “This significant transaction is an important strategic milestone for OVL and we are delighted to have advised them on both this and their prior acquisition of a stake in Area 1. We have very much enjoyed building our relationship with OVL. This transaction further demonstrates our ability to coordinate seamlessly our international resources and use our sector specialist expertise to help our clients achieve their strategic ambitions.”
Negotiations concerning both Videocon and Anadarko transactions commenced separately but around the same time. Because the transaction structures and the sellers’ future remaining roles in the project are different, the strategies for each transaction also vary. Our team across jurisdictions worked seamlessly together in providing all required support to the OVL team for both the Videocon and the Anadarko transactions. The demanding timelines and multifaceted issues made these very challenging and yet rewarding projects.
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