Indian OVL Raises $1bn for Vankor Acquisition

ONGC Videsh, the overseas arm of Indian state owned ONGC, has raised $1bn through a US dollar bond issue to finance its acquisition of 15% stake in Vankorneft, a subsidiary of Russian Rosneft, which operates Vankor field in eastern Siberia, Press Trust of India reported December 19.

In May OVL had completed the acquisition of 15% equity in Vankorneft, for $1.268bn. In a follow-up deal, it bought a further 11% in Vankorneft.

Press Trust added that the proceeds of the issue would go to refinance a $1.2bn bridge loan the company had taken from a group of foreign banks to make payments for the $1.268bn acquisition.

OVL now holds 26% stake in Vankorneft while 23.9% equity is held by the Indian consortium of three other state owned firms: Oil India, Indian Oil Corporation and Bharat Petro Resources. Rosneft continues to hold the remaining 50.1% shares of Vankorneft.

Rosneft subsidiary Vankorneft was established in 2004 to develop Vankor oil and gas condensate field – the largest of the fields, discovered and commissioned in Russia during the last twenty five years. As of Januray 1, 2016, Vankor field 2P reserves by PRMS classification are 265mn tons of oil and condensate and 88bn m³ of gas.

With US and EU sanctions in place, Moscow is looking to expand energy exports in fast growing Asian economies such as China and India, but also with Indonesia. Rosneft and Indonesian state Pertamina agreed in May 2016 a co-operation deal that may lead to a Russian investment in a refinery in eastern Java; and to Pertamina becoming an equity holder in some of Rosneft's upstream interests in Russia.

Shardul Sharma