BPCL’s 2008 Mozambique deal under Govt scanner

■ Oil major allowed Videocon to buy 10% stake offered to it

New Delhi, Oct 28: The government is looking into state-owned Bharat Petroleum Corp Ltd's (BPCL) investments in a gas block in Mozambique and has not yet formally given its approval to the firm for further spendings, sources said.

Bharat PetroResources Ltd (BPRL), an exploration and production subsidiary of BPCL, had in August 2008 bought a 10 per cent stake in Area-1 Offshore of the Rovuma Block from the US energy major Anadarko Petroleum Corp for $75 million. That same month Videocon through its subsidiary acquired a 10 per cent stake in the same block for an equivalent block.

Sources privy the development said Anadarko had originally offered a 20 per cent stake in Area-1 to BPCL ,but the state-owned firm bought only half of it and the rest was picked up by Videocon.

Videocon in 2013 sold the same stake to ONGC Videsh Ltd for $2.475 billion. to

Sources said the government is looking into reasons why BPCL did not buy the entire 20 per cent stake offered to it by Anadarko. Also, why it did not get other state-owned firms like ONGC involved if it wanted the exploration risk to be shared by splitting the 20 per cent stake.

These inquests have led to the government not formally according approval to BPCL to invest a further $2.2-2.4 billion in the development of a giant gas field discovered in Area-1.

The proposal was reviewed by an informal ministerial panel headed by Home Minister Amit Shah in June this year.

The BJP-led NDA government since first coming to power in 2014 has been critical of the nearly $6 billion spent by the public sector firms to take 30 per cent stake in the Rovuma Offshore Area-1 in Mozambique during the Congress-led UPA regime, as falling oil and gas prices did not justify such huge investments.

Besides Videocon's 10 buying per cent stake for $2.475 billion, ONGC Videsh, the overseas arm of state-owned Oil and Natural Gas Corp (ONGC), had bought another 10 per cent stake from project operator Anadarko of the US for $2.64 billion.

It later gave 4 per cent of the stake bought from Videocon to Oil India Ltd.

Sources said even the OVL deal had in the first term of the Modi government come under the scanner following allegations that the company might have overpaid

Videocon.

Videocon was in 2012 willing to sell its stake to OVL at a small premium to the price Thailand's PTT Exploration and Production paid for acquiring an 8.5 per cent stake in the same block from Cove Energy for £1.22 billion ($1.9 billion at the then exchange rate.)

The 10 per cent stake, they said, was available to OVL for about $2.3 billion or so but the company a year later paid $2.475 billion to Videocon.

OVL had strongly refuted the allegations then and it isn't known what happened to that scrutiny.

Woodlands, Texas-based energy exploration company Anadarko, which was later acquired by Occidental, is the operator of the block.

Other partners in Area 1 include Mitsui with 20 per cent stake, ENH (15 per cent) and PTTEP (8.5 per cent). Gas from the block is to be converted into liquefied natural gas (LNG) for transportation by ships to markets like India.