ONGC rigging at Hindustan Shipyard Limited. Photo ( C.V. Subrahmanyam)
New Delhi – ONGC Videsh Ltd, the overseas arm of India’s state-owned Oil and Natural Gas Corporation(ONGC), plans to borrow a record $4 billion to fund its back-to-back acquisitions of stakes in a giant Mozambique gas field.
OVL and Oil India Ltd (OIL) are jointly buying a 10% stake in Mozambique’s offshore Rovuma Area 1 from Videocon for $2.475 billion. OVL followed this deal with the acquisition of another 10% stake in the same field from US energy firm Anadarko Petroleum for $2.64 billion.
“We plan to raise $4 billion in debt for the two acquisitions,” OVL Chairman and ONGC Chairman and Managing Director Sudhir Vasudeva told reporters here.
OVL and OIL’s purchase of Videocon’s stake is in a 60:40 ratio, with OVL’s share at $1.485 billion. To fund this, the company will raise $1.5 billion overseas next week.
“This will be a one-year bridge loan,” OVL Director (Finance) S P Garg said. “This will be replaced by either a US dollar bond issue or a loan from banks.”
Garg said though the company has one year to repay the bridge loan, OVL is looking at refinancing it in the next 3-4 months because current market conditions are good.
OVL, which recently raised $800 million to partly finance its recent acquisition of interest in an Azerbaijan oilfield, will raise $1.5 billion in the US bond market.
The $800 million raised in April in Singapore was to finance a $1.001 billion deal to buy US energy major Hess Corp’s 2.7213% stake in the Azeri, Chirag and the deepwater portion of Guneshli fields in the Azerbaijan sector of the Caspian Sea and 2.36% of the associated Baku-Tbilisi-Ceyhan (BTC) pipeline.
“While the Videocon payments are due shortly, we have time till February to pay Anadarko Petroleum Corp. We will look at borrowing another $2.5 billion for that later. It would either be in form of a bonds issue, long-term overseas loan or borrowing from parent ONGC or a combination of all the three,” Garg said.
Mozambique’s offshore Rovuma Area 1 may hold 35 to 65 trillion cubic feet of gas reserves which can be converted into LNG for transportation by ship to markets such as India.
The Videocon stake purchase was approved by Mozambique in June. OVL is awaiting the Indian government’s approvals for both the Videocon and Anadarko deals.
A unit of state-owned Bharat Petroleum Corp already has a 10% interest in the Rovuma Area 1.
Anadarko, the Woodlands, Texas-based energy-exploration company, will continue to be the operator of the block, with its stake reduced to 26.5% from 36.5% after the deal.
