International law firm Simmons & Simmons has advised ONGC Videsh Limited (“OVL”) and Oil India Limited (“OIL”) on the US$2.475 billion acquisition of Videocon Rovuma 1 Limited, the company holding a ten percent participating interest in the Rovuma Offshore Block in Mozambique (“Area 1”), from Videocon Mauritius Energy Limited.

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 first LNG expected by 2018. The partners in Area 1 include Anadarko, operator of the project, ENH, Mitsui, BPRL and PTTEP.

The acquisition is expected to be implemented via a newly incorporated entity, in which OVL and OIL are expected to hold respective stakes of 60 percent and 40 percent respectively.

The Simmons & Simmons team was led by Hong Kong partners Vivien Yang and Ian Wood, with assistance from associates in our Hong Kong, Singapore, Dubai and London offices, including Hong Kong-based associates Matthew Davis, Liz Hsu, and Moven Liu.

Commenting on the transaction, Vivien Yang said: "This has been a great transaction to work on as it involves assets with significant recent discoveries that have a real potential of leading to the LNG project becoming one of the world’s largest LNG projects.” Vivien continued, “With the project's relatively low costs, in comparison with other LNG projects under planning in the Americas and Australia, and close proximity to Asia, in particular India, Area 1 is a significant asset for both OVL and OIL whether they eventually become offtakers of the LNG project or simply profit from the sale of LNG to other buyers.”

Ian Wood added “We are pleased to have advised OVL and OIL on this significant and strategically important transaction which is a further step towards ensuring energy security for India. This transaction showcases the strength and depth of our energy sector experience in emerging markets”.

The transaction was particularly complex as it involved a multifaceted structure, a demanding timeline and required seamless integration of legal services across multiple jurisdictions. The Area 1 LNG project will be the first significant natural gas production and export project in Mozambique and the new legal infrastructure being established specifically for this type of project added to the complexity of the investment.