• OVL to raise $900 million bridge loan to finance Vankor buy

    ONGC Videsh Ltd (OVL) will raise a bridge loan of close to $900 million overseas to fund acquisition of an additional 11 per cent stake in Russia’s Vankor oilfield. OVL, the overseas arm of state-owned Oil and Natural Gas Corp (ONGC), last week got government nod to raise its stake in Russia’s second biggest oil field of Vankor to 26 per cent at an investment of $930 million. It will buy the sake from Russian national oil company, Rosneft.

    “The acquisition needs some approvals by the Russian government. Once they come in, we will make the payment,” an official said. The company, he said, will raise a bridge loan of 6 to 9 months from overseas financial institutions. A long term financing through foreign currency bonds, will be raised to replace the bridge loan. “The deal is effective May 2015. It is a producing field. So the profits that accrued from sale of oil (to Rosneft for the 11 per cent share) for one-and-half-years will be deducted from sale consideration and payments will be made,” he said.

    The amount of bridge loan to be raised will depend on this final number, he said. OVL, which had previously bought 15 per cent stake in Vankor from Russian national oil firm Rosneft for $1.268 billion, will an additional 3.2 million of oil equivalent on top of 4.11 million tons secured earlier. Besides OVL’s 26 per cent, a consortium of comprising Oil India (OIL), Indian Oil Corporation (IOC) and Bharat PetroResources (BPRL) has acquired 23.9 per cent stake in the field at a cost of $2.02 billion, giving them 6.56 million tons of oil.
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