• OVL raises $1 billion through dollar bonds for Vankor stake buy

    ONGC Videsh Ltd has raised $1 billion through a US dollar bonds issue to finance its acquisition of 15 per cent stake in Russia’s second biggest oil field Vankor. OVL, the overseas arm of state-owned Oil and Natural Gas Corp (ONGC), raised $600 million through a 10-year bond at a coupon rate of 3.75 per cent and another $400 million through a 5.5-year maturity bond at an interest rate of 2.875 per cent, company’s Director (Finance) S P Gargsaid.

    The proceeds of the issue would go to refinance a $1.2 billion bridge loan the company had taken from a group of foreign banks to make payments for the $1.268 billion acquisition. “We will draw down the bonds sometime next week,” he said. The bridge loan was taken in May this year at a highly competitive rate of about 1.3 per cent. The interest rate is lower than 4.625 per cent OVL had paid on a $2.23 billion 10-year bond issue in July 2014 to finance its Mozambique gas field acquisition.

    OVL had in September last year struck a deal to buy 15 per cent in the Russia’s second biggest oil field of Vankor from Rosneft for $1.268 billion. OVL had signed the agreement to buy 15 per cent stake in Vankorneft, the developer of the Vankor oil and gas condensate field in Turukhansky district of Krasnoyak Territory in Russia. In March this year, it signed an initial agreement to buy an additional 11 per cent. That deal is yet to close, he said.

    Vankor, the largest field to have been discovered and brought into production in Russia in the last 25 years, is located in the northern part of Eastern Siberia. As of January 1, 2015, the initial recoverable reserves in the Vankor field are estimated at 476 million tons of oil and condensate, and 173 billion cubic meters of gas. The area of the Vankor field is 447 square kilometers. Oil and gas condensate production in 2015 was 22 million tons.

    The 15 per cent stake will give OVL 3.3 million tons per annum of oil production. Prior to the deal, Rosneft, Russia’s national oil company, held 100 per cent stake in Vankorneft. This is the fourth biggest acquisition by OVL. It had in 2013 paid $4.125 billion for a 16 per cent stake in Mozambique’s offshore Rovuma Area 1, which holds as much as 75 trillion cubic feet of gas reserves.
    In 2009, it had bought Russia-focused Imperial Energy for $2.1 billion. Prior to that in 2001, it had paid $1.7 billion for a 20 per cent interest in the Sakhalin-1 oil and gas field off Russia’s far eastern coast. With daily output of 442,000 barrels per day, Vankor accounts for 4 per cent of Russian production. Nomar Mazara Jersey

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