OVL, the overseas arm of ONGC, has teamed up with GAIL India to place a joint bid to acquire UK-based energy firm Cove Energy Plc, a deal valued over $1.2 billion or Rs 6,000 crore, said sources briefed on the matter. Cove and its subsidiaries are engaged in exploration , development, and production of oil and gas reserves in Mozambique, Tanzania, and Kenya.
Cove Energy has an 8.5% stake in Rovuma gas filed in Mozambique with an estimated 30 trillion cubic feet (tcf) of gas reserves, or three times bigger than Reliance Industries Ltd's gas discovery in Krishna Godavari basin . Cove Energy, with a market value in excess of $950 million, has mandated Standard Chartered Bank and Cenkos Securities Plc for a sale process and opened its data room last month to interested bidders.
Both OVL and GAIL have concluded technical due diligence and are expected to place the financial bid soon, a person familiar with the development told TOI. OVL chairman D K Saraf declined to comment. A senior GAIL official too refused comment.
One of the sources mentioned earlier added that Oil India had looked at the UKbased firm before backing out. Earlier this week, Bloomberg reported that Oil India may place a bid for Cove Energy.
"We have looked at the asset but are not going ahead for the bids for technical reasons . It's a good asset," an Oil India board member said on the condition of anonymity.
Indian firms BPCL and Videocon has 10% stake each and right of first refusal in Rovuma gas filed, operated by US based Anadarko Petroleum . But these firms are not exercising their rights to buy Cove Energy's 8.5% stake in the Mozambique gas block.
Confirming this move, Videocon Industries chairman V N Dooth told TOI, "Rovuma filed in Mozambique is a great gas discovery. We are not seeking to enhance our stake or sell it either. We aim to bring gas to India as India is a gas deficit country."
Last week, Cove Energy secured permission from the UK Takeover Panel to sell itself by way of a secret auction with the identity of the successful bidder only being revealed once a sale concludes .
"The Directors have decided to conduct a formal sale process for the entire issued and to be issued share capital of the Company, running alongside other strategic options, including a transaction involving the sale of the Rovuma Area 1 Interest, in line with the Company's stated strategy," said a statement from Cove last week.
Share of ONGC closed marginally up at Rs 260 while GAIL shares closed down 3% to Rs 373 in a firm Mumbai market on Friday.
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