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Rovuma Basin Area 1: Indian state company plans to refinance loan to conclude gas deal in Mozambique

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Indian state company Oil India Ltd (OIL) plans to secure US$900 million on the international market to refinance a loan taken on to cover its part of the acquisition of a stake in a natural gas block in Mozambique, India’s Economic Times reported.

In January, Oil and Natural Gas Corp (ONGC) and Oil India Ltd concluded their joint acquisition of a 10 percent stake in the Area 1 block, in northern Mozambique, owned by Indian group Videocon Industries for US$2.475 billion.

The stake was initially split 60-40 between ONGC Videsh, the group’s company for foreign business, and OIL but, after the former company bought an additional 10 percent in the block, OIL took on 50 percent of this deal.

At the time OIL took on a one-year loan for US$1.3 billion to fund its part of the acquisition, of which US$1.03 billion was to pay for the initial 40 percent and the remainder for the additional 10 percent.

In order to protect the company from exchange rate volatility between the US dollar and the Indian rupee, the US$900 million will be made up of a basket of currencies and Citibank, Deutsche Bank, Hong Kong and Shanghai Banking Corp, Royal Bank of Scotland and Standard Chartered have been hired for the debt placement.

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