OVL COM­PLETES 11% MORE STAKE BUY IN RUS­SIA’S VANKOR OIL FIELD

Resource Digest - - RESOURCE DIGEST -

ONGC Videsh Ltd, the over­seas arm of state-owned Oil and Nat­u­ral Gas Corp, has com­pleted the ac­qui­si­tion of ad­di­tional 11 per cent in­ter­est in Rus­sia’s Vankor oil­field, tak­ing its to­tal stake to 26 per cent. The com­pany signed a deal with Ros­neft Oil Com­pany to ac­quire ad­di­tional 11 per cent stake in the East Siberian field for USD 930 mil­lion on Oc­to­ber 28.

“We raised a bridge loan of USD 930 mil­lion from over­seas lenders to pay for the ac­qui­si­tion cost of 11 per cent stake,” OVL CEO and Man­ag­ing Di­rec­tor Naren­dra K Verma said here. OVL, which had pre­vi­ously bought 15 per cent stake in Vankor from Rus­sian na­tional oil firm Ros­neft for USD 1.268 bil­lion, will get an 7.3 mil­lion tons of oil equiv­a­lent from its 26 per cent stake.

OVL will tie-up long-term fi­nanc­ing in the next 6 to 9 months to re­place the bridge loan, he said.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 USD 2.02 bil­lion, giv­ing them 6.56 mil­lion tons of oil.

After the stake sales, Ros­neft holds 50.1 per cent stake in JSC Vanko­rneft, the com­pany that op­er­ates the Vankor oil­field. Verma and Igor Sechin, CEO, Ros­neft, had on Septem­ber 14 in Moscow inked an agree­ment to take the ad­di­tional eq­uity stake in Vankor. That agree­ment was sub­ject to cer­tain con­di­tions in­clud­ing ap­provals from the In­dian and Rus­sian gov­ern­ments.

All ap­provals are in place, lead­ing to clo­sure of the deal, he said. “The com­ple­tion within very short pe­riod of the bind­ing agree­ment re­flects the speed and co­op­er­a­tion with which both OVL and Ros­neft have moved and the sup­port that the in­vest­ments by In­dian com­pa­nies in Rus­sian oil sec­tor en­joy with the Rus­sian and In­dian gov­ern­ments.”

Vankor is Ros­neft’s (and Rus­sia’s) sec­ond largest field by pro­duc­tion and ac­counts for 4 per cent of the coun­try’s pro­duc­tion. The daily pro­duc­tion from the field is around 410,000 bar­rels per day of crude oil and 26 per cent stake would give OVL about 107,000 bpd. “The ac­qui­si­tion of ad­di­tional 11 per cent would add about 30 per cent to the ex­ist­ing OVL’S pro­duc­tion at the cur­rent rate and ap­prox­i­mately 2.2 mil­lion tons of oil and 1.0 bil­lion cu­bic me­ters of gas an­nu­ally,” he said. The field has re­cov­er­able re­serves of 2.5 bil­lion bar­rels.

The USD 2.2 bil­lion OVL spent for ac­quir­ing 26 per cent stake in Vankor will be its third big­gest ac­qui­si­tion. It had in 2013 paid USD 4.125 bil­lion for 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 USD 2.1 bil­lion. Prior to that, it had in 2001 paid USD 1.7 bil­lion for 20 per cent in­ter­est in the Sakhalin-1 oil and gas field off Rus­sia’s far east­ern coast.

NAREN­DRA K. VERMA, MD & CEO, ONGC VIDESH

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