Anadarko Petroleum has entered into a definitive agreement with India’s ONGC Videsh Ltd. (OVL), a wholly-owned subsidiary of the state-owned Oil and Natural Gas Corporation Ltd., to sell a stake in a high-profile block offshore Mozambique.

ONGC will take a 10% interest in Offshore Area 1 (Area 1) for a total cash price of US $2.64 billion, with Anadarko to remain the operator of Area 1 with a working interest of 26.5%.

The transaction is expected to close around the end of 2013, and is subject to existing preferential rights, govern- mental approvals and other customary closing conditions.

Area 1 is operated by Anadarko Moçambique Area 1 Limitada (a wholly owned indirect subsidiary of Anadarko) and is located in the deep- water Rovuma Basin. The block contains the world-class Prosperidade and Golfinho/Atum natural gas complexes that hold a combined esti- mated 35 to 65-plus Tcf of recoverable natural gas resources. In co-operation with the Government, Anadarko, its partners and Eni (as the operator of adjacent Area 4) continue to advance the development of an LNG park with first LNG cargoes expected in 2018.

Anadarko’s partners in Area 1 include Mitsui E&P Mozambique Area 1, Limited (20%), BPRL Ventures Mozambique B.V. (10%), Videocon Mozambique Rovuma 1 Limited (10%) and PTT E&P (8.5%). Empresa Nacional de Hidrocarbonetos, E.P.’s (ENH) 15% interest is carried through the exploration phase.

“This transaction demonstrates our continuing ability to create substantial value through exploration and to again accelerate the value of our longer-dated projects through attractive monetisations and third-party capital,” said Anadarko’s Chairman, President and CEO, Al Walker. “Mozambique LNG is a premier global energy project, and we look for- ward to working with our partners and the government to advance this world- class development.”

He continued: “As the operator of Area 1, we are very pleased to have reached this agreement with OVL, which values our pre-transaction interest at more than $9.6 billion. We expect to use the net proceeds from this transaction to further accelerate the short- and intermediate-term oil and liquids opportunities we have in the Wattenberg field, Eagleford Shale, Permian and Powder River basins, as well as the Gulf of Mexico and other evolving plays in our portfolio.”

The purchase of Anadarko’s stake, if it goes through, is the latest in a handful of overseas assets that ONGC Videsh has bought in the last couple of years as it looks to secure more gas volumes to meet its domestic demand. In June ONGC and state-run Oil India Ltd. signed a deal to buy a 10% stake in a Mozambique gas field from Videocon Group for $2.48 billion. “There is a lot of energy demand and whatever volumes of gas we are able to bring to the country are of utmost significance,” said A. K. Srinivasan, ONGC’s group general manager for finance. “Mozambique will be a big LNG hub for the future.”

Bank of America Merrill Lynch advised ONGC Videsh and Citigroup advised Anadarko on the transaction.