Anadarko Petroleum (NYSE:APC) announced yesterday it would sell a 10% interest in its Mozambique offshore area -- called Area 1 -- to Indian energy company ONGC Videsh Limited for $2.64 billion in cash.

The area being sold is located in Mozambique's deepwater Rovuma Basin, which ONGC says holds the largest gas discovery in offshore East Africa and is estimated to have 35 trillion to 65 trillion cubic feet of recoverable natural gas. ONGC Videsh, also called OVL, a wholly owned subsidiary of Oil and Natural Gas Corporation Limited, the national oil company of India, will tap into the area's vast liquid natural gas (LNG) resources. 

If the deal goes through, Anadarko will remain the operator of Area 1 and will still hold a 26.5% interest in it.

Anadarko President and CEO Al Walker said in a statement that the company expects to use the net proceeds from the 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." 

Sudhir Vasudeva, chairman of ONGC Videsh, said in that company's press release that "Area 1 has potential to become one of the world's largest LNG projects and today's acquisition marks a further significant step by OVL/ONGC group toward the energy security of our country."

The acquisition still needs to be approved by the Mozambique and Indian governments, but is expected to close toward the end of this year.