ONGC raises $1 bn to buy 15% stake in Russian Vankor Field

The Dollar Business Bureau

ONGC Videsh Ltd (OVL), the overseas arm of state-owned explorer Oil and Natural Gas Corporation (ONGC), has raised $1 billion via the issue of US dollar bonds to fund its acquisition of 15% shareholding in Russia oil and gas field - The Vankor Field, the company said on Thursday.

“OVL raised $600 million through a 10-year bond at a coupon rate of US treasury rate plus 2.20 percent and another $400 million through a 5.5-year maturity bond at an interest rate of US treasury rate plus 1.75 percent,” said Narendra K Verma Managing Director, OVL.

“In the current scenario, these are one of the lowest cost financing rates,” he added.

The earnings from the issue would be used to refinance a bridge loan of $1.2 billion, which the corporation had taken from a group of international banks for funding the $1.268 billion acquisition.

The company has taken the bridge loan in May 2016 at highly competitive rate of around 1.3%. However, the interest rate is less than 4.625% OVL had paid in July 2014 for a $2.23 billion ten-year bond issue to fund its gas field acquisition in Mozambique.

In September last year, OVL had struck a deal to purchase 15% in the Russia's Vankor oil field from Rosneft for $1.268 billion.

In March, the company signed an initial pact to acquire an additional 11% for $930 million.

Vankor Field, situated in the northern part of Eastern Siberia, is the biggest field that has been discovered and brought into production in Russia in the past 25 years.