India's OVL Raises $1 bn to Fund Vankorneft Deal

ONGC Videsh Vankorneft Pte. Ltd., an indirect wholly-owned subsidiary of ONGC Videsh Limited (OVL), has raised $1 billion to fund the purchase of 15 percent stake in Vankorneft.

OVL, the overseas arm of Indian state owned major ONGC, in May inked a $1.27 billion deal with Rosneft to buy 15 percent stake in Vankorneft. On September 4, 2015 Rosneft and OVL had signed the sale and purchase agreement. The deal got Russian government's go ahead in March this year. 

"OVL priced on July 19, 2016 $1 billion notes comprising of $400 million senior unsecured notes due 2022 and $600 million senior unsecured notes due 2026 in the international capital markets. The notes are guaranteed by ONGC,” ONGC said in a statement.

Vankorneft is a 100-percent subsidiary of Rosneft, and Vankor is the largest oil and gas field discovered in Russia in the past 25 years. The field is located in the North of Eastern Siberia. Plans are in place to produce about 500 million tonne of oil and about 182 billion cubic metres of gas jointly by the Russian and Indian sides at this field alone. 

In March, the two parties also signed an initial deal which would allow the Indian to firm buy additional 11 percent stake in Vankorneft. The finer details of this deal are yet to be worked out. 

As on January 1, 2016 Vankor field 2P reserves by PRMS classification are 265 mln tonne of oil and condensate and 88 bcm of gas, according to Rosneft website.