Drill time

New Delhi, Dec. 9: ONGC Videsh (OVL) today placed before the Imperial Energy shareholders its 1,250-pence-a-share bid to take over the UK-listed firm after the Indian government allowed it to proceed with the offer, even though returns from the deal had waned because of cheaper crude.

The fresh offer of OVL, the overseas arm of state-run oil giant ONGC, is the same as the one proposed by it in August, and values Imperial at £1.4 billion. Earlier in the day, the Cabinet Committee on Economic Affairs gave its clearance after ONGC Videsh said it might face court proceedings for breaching a “binding” agreement if it did not make the offer by midnight.

The CCEA had only one agenda listed, and after some deliberations, cleared the plan, a source said. Petroleum minister Murli Deora, however, refused to comment.

The source said the CCEA had in August given OVL a go-ahead for the Imperial acquisition based on its projection of a 10 per cent return on investment — taking a crude oil price of $121 per barrel. But since then the rupee has depreciated 20 per cent and crude has fallen to around $43 a barrel, sending the rate of return down to 3-4 per cent.

With the parameters changing, revised approval was sought from the CCEA at its regular meeting on December 4, but the matter did not come up for discussion because of the Mumbai terror attacks.

Thereafter, OVL had sought an extension from the UK takeover panel for the Cabinet to consider its application at the next meeting scheduled for December 11. However, the UK panel refused to grant any extension.

The price of crude has declined 62 per cent since OVL offered to buy Imperial in August. The deal will be ONGC’s biggest acquisition, giving it access to Siberian reserves.

Imperial was trading at around 907 pence on the London Stock Exchange today.