Dinesh K Sarraf, Managing Director of ONGC Videsh (OVL) informed reporters that the firm plans to issue $1 billion worth dollar bonds in order to finance its stake buy in Azerbaijan oil fields.
The firm delayed its maiden overseas bond issue, which was initially planned between January and March, in order to complete the acquisition.
The overseas arm of state-owned Oil & Natural Gas Corp (ONGC) concluded a $1.001 billion deal to buy US energy major Hess Corp’s 2.7 per cent stake in the Azeri, Chirag and Guneshli oilfields in Azerbaijan, and 2.4 per cent of the associated BTC pipeline.
This is OVL’s biggest acquisition since 2009 when it bought UK-listed, Russia-focused Imperial Energy Plc for $2.1 billion.
Since all of OVL’s assets and liabilities are denominated in dollars, the company feels refinancing to be easier. The company, which gets most of its funds from its parent firm, has already appointed merchant bankers for raising the debt, a source said.
The firm would benefit from overseas borrowing as dollar debt is cheaper than rupee borrowings.
ACG, which is located in the south Caspian Sea, about 95 km off the coast of Azerbaijan, is the largest oil and gas field complex in Azerbaijan and one of the largest producing oil fields in the world.
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