ONGC Videsh raises $2.2 billion for Mozambique Area 1 acquisition

India’s state owned explorer ONGC Videsh limited has reported it has raised $2.2 billion through a dollar and Euro bond to finance a debt arising from the acquisition of Mozambique oilfields.

ONGC Videsh had in January alongside Oil India limited announced the acquisition of 10% PI in the Rovuma Area 1 offshore Block, Mozambique by acquiring 100% shares of Videocon Mozambique Rovuma 1 Limited, the company holding the 10% PI in the Area 1 from Videocon Mauritius Energy Limited.

The $2.2 billion is broken into $750 million in five-year bonds, $750 million in 10-year bonds and euro 525 million in seven-year bonds with the five-year dollar bonds priced at US Treasury yields plus 160 basis points, 10-year dollar bond at US Treasury yields plus 207.5 bps and the euro bond at MS+180.

Investors have termed the deal as the biggest RegS deal from Asia and a clear show of the company’s credit and investor confidence.

Area 1 covers approximately 2.6 million acres in the deep-water Rovuma Basin, offshore Mozambique and represents the largest gas discovery in offshore East Africa with estimated recoverable reserves of 35 to 65 trillion cubic feet. The partners in Area 1 include Anadarko (operator of the project), ENH (the NOC of Mozambique), Mitsui, BPRL, and PTTEP.