Millennium Post

ONGC Videsh raises profit by 44% to record Rs3,929 cr

ONGC Videsh Ltd (OVL), Oil & Natural Gas Corporation’s (ONGC) wholly-owned subsidiary for foreign operations, achieved its highest-ever profit of Rs 3,929 crore in fiscal 2012-13, an increase of 44.4 per cent compared to the previous financial year (2011-12).

However, oil production during the year was lower, mainly due to the adverse geo-political situation in Syria and South Sudan.

OVL currently participates in 32 projects in 16 countries, of which 11 are producing projects, five discovered/ under-development projects, 14 exploratory projects and two pipeline projects.

The company discovered oil in the first well of onshore exploration block CPO-5 in Colombia, in which it is the operator with 70 per cent participating interest. The first of the two commitment wells, ie Kamal-1, was spudded on 29 October 2012, and drilled up to the target depth of 10,500 feet with oil discovery. The second well is currently under testing with encouraging results.

The company continues to pursue securing energy independence for India through both organic and inorganic growth by participating in bidding rounds in exploration blocks and acquiring discovered/ producing oil & gas projects overseas with the strategic target of reaching a total production level of 20 MMToe per annum by financial year 2017-18 and 60 MMToe per annum by fiscal 2019-30.

The acquisition of Hess Corporation’s 2.7213 per cent participating interest in the Azeri, Chirag and the Deep Water Portion of Guneshli fields in the Azerbaijan sector of the Caspian Sea (ACG) and 2.36 per cent interest in the Baku-Tbilisi-Ceyhan (BTC) pipeline was completed on 28 March, 2013.

The acquisition will bring about 9 per cent additional proved reserves to ONGC Videsh Ltd’s portfolio and daily oil production of about 19,000 barrels or (0.9 MMT per annum).

To part finance the ACG and BTC acquisition, the company made an inaugural dollar bonds offering in the international capital markets with a duel tranche $800 million notes in April 2013.

The offering was well received, with the order book closing at about $3 billion.

The 5-year tranche of $300 million was priced at a spread of 190 basis point (bps) above the 5-year US treasury at a yield of 2.574 per cent per annum and the 10-year tranche of $500 million was priced at a spread of 210 basis point above the 10-year US treasury at yield of 3.756 per cent per annum.

This inaugural bond offering, guaranteed by parent company ONGC, represent the largest REG-S only issuance by an Indian issuer in the dollar bond markets at the lowest coupon rates and has set a benchmark in pricing by Indian issuer.
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