Vasudeva: Cash chase
New Delhi, Sept. 25: ONGC Videsh Ltd (OVL) — the overseas arm of Oil and Natural Gas Corporation — plans to raise $4 billion through loans and bonds in the international market to fund its acquisitions in Mozambique.
“We plan to raise $4 billion in debt for the two acquisitions,” OVL chairman Sudhir Vasudeva said today.
OVL and Oil India Ltd are jointly buying a 10 per cent stake in Mozambique’s offshore Rovuma Area 1 from Videocon for $2.47 billion. OVL is also picking up a 10 per cent stake in the same field from US energy firm Anadarko Petroleum for $2.64 billion.
“We target to do it (fundraising) within this financial year, though we have one year’s time from now,” Vasudeva said on the sidelines of a meeting of shareholders.
OVL finance director S.P. Garg said the company would initially raise $1.5 billion through a bridge loan.
The process of inviting bids from banks will start next week, and the company targets to raise the bridge loan by November.
High interest rates in the country make it cheaper for companies to raise debt abroad.
ONGC plans to start drilling for shale gas in Gujarat from next month.
Yesterday, the cabinet committee of economic affairs allowed ONGC and Oil India to tap the unconventional hydrocarbon resource in blocks allotted to them on a nomination basis.
“Next month, we plan to spud a well for shale gas in Cambay basin (in Gujarat),” ONGC director (exploration) N.K. Verma said. The company plans to drill four wells this year.
“Four wells will cost around Rs 150-200 crore. Shale oil and gas wells are 2.5 times costlier than conventional oil and gas as they involve hydraulic fracturing,” he said.
Verma said ConocoPhillips was assisting ONGC in the shale gas venture.
Various studies have estimated recoverable reserves at 6 trillion cubic feet (tcf) to 63tcf.
ONGC is also looking to increase natural gas production to 100 million metric standard cubic metres per day (mmscmd) by 2017-18 from 65mmscmd at present.
The state-run firm’s showpiece KG-DWN-98/2 block off the east coast, which sits next to the KG-D6 basin of Reliance Industries, will start production latest by 2017-18, Vasudeva said.