Oil and Natural Gas Corp (ONGC) and OIL, the nation's biggest state-run explorer, yesterday announced that they will buy Videocon Industries' 10 per cent stake in a supergiant Mozambique gas field for USD 2.5 billion. The stake will be split 60:40 between OVL, the overseas arm of ONGC, and OIL.
"We plan to go to overseas market to raise 80 to 90 per cent of our share of USD 1 billion (in the acquisition)," OIL Director (Finance) T K Ananth Kumar told reporters here. The borrowing, which will insulate the company from the volatility in the rupee-dollar exchange rate, will be a combination of external commercial borrowing and US dollar bond issue.
With rupee plummeting to a record low of 60.76 to a US dollar, outward remittance will cost more for companies. Raising debt overseas and paying for the acquisition in offshore accounts of the seller would insulate the deal from the currency fluctuations.
"The currency variation will only have a marginal impact... to the extent of 10 per cent of the deal size that we have to pay from our reserves," he said. OIL Director (Business Development) N K Bharali said the Rovuma-1 field in the waters off the African nation, holds 35 to 65 Trillion cubic feet of gs reserves which are planned to be converted into liquid gas (LNG) for exports to nation's like India.
"First gas is planned for 2018," he said, adding that the acquisition of 10 per cent interest of Videocon is targeted to close by September 30, 2013. The deal is subject to approval of the Mozambique and Indian government, regulatory permissions and existing partners in Rovuma-1 area waiving off their pre-emption rights, he said adding that the partners in the block have one month time to decide. Bharali said besides the acquisition price, OVL-OIL will have to also pay their share of field development cost and the capital expenditure required for building plants that will turn gas into liquefied natural gas (LNG).
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