ONGC Videsh Ltd (OVL) will raise a bridge loan of close to $900 million overseas to fund an acquisition of an additional 11 percent stake in Russia’s Vankor oilfield.
OVL, the overseas arm of state-owned Oil and Natural GasBSE -0.07 % Corp (ONGC), last week got government nod to raise its stake in Russia’s second biggest oil field of Vankor to 26 percent at an investment of $930 million. It will buy the stake from Russian national oil company, Rosneft.
“The acquisition needs some approvals by the Russian government. Once they come in, we will make the payment,” an official said.
The company, he said, will raise a bridge loan of 6 to 9 months from overseas financial institutions. A long-term financing through foreign currency bonds will be raised to replace the bridge loan.
“The deal is effective May 2015. It is a producing field. So the profits that accrued from the sale of oil (to Rosneft for the 11 per cent share) for years will be deducted from sale consideration and payments will be made,” he said.
The amount of bridge loan to be raised will depend on this final number, he said.
OVL, which had previously bought 15 per cent stake in Vankor from Russian national oil firm Rosneft for $1.268 billion, will an additional 3.2 million tons of oil equivalent on top of 4.11 million tons secured earlier.
Besides OVL’s 26 per cent, a consortium of comprising Oil India, Indian Oil Corporation and Bharat PetroResources (BPRL) has acquired 23.9 percent stake in the field at a cost of $2.02 billion, giving them 6.56 million tons of oil.
Parallely, an OIL-led consortium has also bought 29.9 per cent stake in Taas-Yuryakh oilfield in East Siberia for $1.12 billion.
Rosneft, the national oil company of Russia continues to hold the remaining 50.1 percent shares of JSC Vankorneft, the developer of the Vankor oil and gas condensate field in Turukhansky district of Krasnoyak Territory in Russia.
The field has recoverable reserves of 2.5 billion barrels.
Vankor is Rosneft’s (and Russia’s) second largest field by production and accounts for 4 percent of Russian crude oil production. The daily peak production from the field is around 442,000 barrels of oil per day.
The $2.2 billion OVL spent for acquiring 26 percent stake in Vankor will be its third biggest acquisition. It had in 2013 paid $4.125 billion for a 16 percent stake in Mozambique’s offshore Rovuma Area 1, which holds as much as 75 Trillion cubic feet of gas reserves.
In 2009, it had bought Russia-focused Imperial Energy for $2.1 billion. Prior to that, it had in 2001 paid $1.7 billion for a 20 per cent interest in the Sakhalin-1 oil and gas field off Russia’s far eastern coast.
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Source: Economic Times
