OVL to raise $900 mn bridge loan to finance Vankor buy
ONGC Videsh Ltd (OVL) will raise a bridge loan of close to $ 900 million overseas to fund acquisition of an additional 11 per cent stake in Russia’s Vankor oilfield.
OVL, the overseas arm of state-owned Oil and Natural Gas Corp (ONGC), last week got government nod to raise its stake in Russia’s second biggest oil field of Vankor to 26 per cent at an investment of $ 930 million. It will buy the sake 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 sale of oil (to Rosneft for the 11 per cent share) for one-and-half-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 (OIL), Indian Oil Corporation (IOC) and Bharat PetroResources (BPRL) has acquired 23.9 per cent stake in the field at a cost of $ 2.02 billion, giving them 6.56 million tons of oil.
Parallely, 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 per cent 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 per cent 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 per cent stake in Vankor will be its third biggest acquisition. It had in 2013 paid $ 4.125 billion for a 16 per cent 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.
Earlier, Oil and Natural Gas Corp (ONGC) has signed a preliminary agreement to take an operating stake in Gujarat government firm GSPC’s KG basin gas block. The Memorandum of Understanding (MoU) signed last week has a dispute resolution mechanism set out wherein any differences over issues like valuation or natural gas reserves would be referred to a three-member committee of outside experts.
Sources said Gujarat State Petroleum Corp (GPSC) is keen to get ONGC on board to help tide over its difficulties in producing gas from the Deendayal fields, which a decade back were touted as the biggest discovery in India.
GSPC began trial production of a very small volume of gas from August 4, 2014 but has not yet reached commercial production.
“Daily plateau production gas rate envisaged from Deen Dayal Upadhaya (DDN) West field is around 5.663 million standard cubic meters per day as per approved Field Development Plan (FDP) for a period of 14 years.
“There is problem of high pressure and high temperature in completion/drilling of wells in the field. No final date of commercial production has yet been given by operator (GSPC),” according to an RTI reply by the Oil Ministry’s technical arm DGH.