OVL to raise $1 billion to fund Azeri acquisition
ONGC Videsh Ltd, the overseas arm of state-owned Oil & Natural Gas Corp (ONGC), today said it aims to raise up to USD 1 billion through a dollar issue this month to fund its recent acquisition in Azerbaijan.
New Delhi: ONGC Videsh Ltd, the overseas arm of state-owned Oil & Natural Gas Corp (ONGC), today said it aims to raise up to USD 1 billion through a dollar issue this month to fund its recent acquisition in Azerbaijan.
OVL last week concluded a USD 1.001 billion deal to buy US energy major Hess Corp's 2.7 per cent stake in the Azeri, Chirag and Guneshli oilfields in Azerbaijan, and 2.4 per cent of the associated BTC pipeline.
"It makes sense to raise cheaper debt through overseas bond issuance," OVL Managing Director Dinesh K Sarraf told reporters on the sidelines of an industry event here.
The company had initially planned to issue its maiden overseas bond between January and March, but delayed it to complete the acquisition.
He said refinancing was easier since all of OVL's assets and liabilities are denominated in dollars.
The company, which gets most of its funds from its parent firm, has already appointed merchant bankers for raising the debt, a 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 per cent participating interest in the Azeri, Chirag and the deepwater portion of Guneshli fields in the Azerbaijan sector of the Caspian Sea and 2.36 per cent interest in the Baku-Tbilisi-Ceyhan (BTC) pipeline for USD 1 billion.
The Azerbaijan acquisition was OVL's biggest since 2009 when it bought UK-listed, Russia-focused 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 per cent 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.