OVL plans to raise $1 bn via dollar bonds issue in Q1 of FY13
New Delhi: ONGC Videsh Ltd, the overseas arm of state-owned Oil & Natural Gas Corp (ONGC), plans to raise about USD 1 billion through a dollar bonds issue early next year to fund its recent acquisition in Azerbaijan.
"We are planning a dollar bonds issue in first quarter of 2013," a top source said. "Ultimately, what we raise will depend on a lot of factors, but yes we are looking at raising around USD 1 billion."
OVL had in its biggest purchase since acquiring Russia- focused Imperial Energy, in September announced buying US energy firm Hess Corp's stake in Azeri, Chirag and Guneshli (AGC) group of oil fields in the Central Asian nation for USD 1 billion.
The company, which gets most of its funds from its parent firm, has already appointed merchant bankers for raising the debt, the source said.
"There is no doubt that dollar debt is cheaper than rupee borrowings," he said.
OVL in September agreed to buy Hess Corp's 2.7213 percent participating interest in the Azeri, Chirag and the deepwater portion of Guneshli fields in the Azerbaijan sector of the Caspian Sea and 2.36 percent interest in the Baku-Tbilisi-Ceyhan (BTC) pipeline for USD 1 billion.
"The debt we are planning to raise will to fund this acquisition. The acquisition is expected to close by the first quarter of 2013 and that's when we are planning the borrowing," he said.
The Azerbaijan acquisition was OVL's biggest since 2009 when it bought UK-listed Imperial Energy Plc for USD 2.1 billion.
ACG, which is located in the south Caspian Sea, about 95 km off the coast of Azerbaijan, is the largest oil and gas field complex in Azerbaijan and one of the largest producing oil fields in the world.
UK's BP Plc operated field produces around 700,000 barrels a day (35 million tonnes per annum) of crude oil. This is more than India's annual oil production.
OVL's share of output would be over 19,000 bpd or a little less than one million tonnes per annum.
The acquisition would bring 9 percent additional proved reserves to OVL.
While the AGC field has total reserves of over 6.5 billion barrels, the 1,768-km BTC pipeline is one of the main export routes for Caspian crude oil production to the Ceyhan terminal in the Mediterranean Sea in south east Turkey, with a capacity of around 1.0 million bpd.