OVL set for major acquisitions abroad; expresses interest for bidding in Tanzanian oil blocks

DK Sarraf: OVL Managing Director

ONGC Videsh Ltd, the overseas arm of state-owned Oil and Natural Gas Corp (ONGC) is all set for major acquisitions abroad. OVL has expressed interest for bidding in the 4th Licensing round for seven offshore and one onshore oil/gas blocks in Tanzania, keeping in mind...

the measures to be taken to strengthen cooperation in the field of oil and gas, said a statement released by ministry of commerce and industry. The matter came up for discussion between Dr D Purandeswari, minister of state for commerce and industry and Dr Abdallah O Kigoda, minister of industry and trade, Tanzania, during the 3rd meeting of the Tanzania-India Joint Trade Committee (JTC) held at Dar-es-Salaam, Tanzania on Wednesday.

These acquisition bids come at a time when the company is looking to raise $4 billion (Rs 24,950 crore) through bonds and loans in international market to fund its recent acquisitions in Mozambique. These bids may further put pressure on the exchequer particularly at a time when rupee is struggling to gain a firm ground against the US dollar. The oil major is also under pressure from the PMO to achieve its target of oil production. 

The OVL is also in talks to buy more oil and gas blocks in Kazakhstan after losing a big Caspian Sea oil field deal to China National Petroleum Corp. Kazakhstan had recently blocked OVL's $5-billion-deal to acquire 8.4-percent-stake in its giant Kashagan oil field and handed over the interest to the Chinese oil major. OVL had last year struck a deal to buy US giant ConocoPhillips' 8.4-percent-stake in the Kashagan offshore oil project in the Caspian Sea. The Kashagan field, located in the shallow waters (about 5-8 metres) of the Kazakh North Caspian Sea, is the world's largest current development project.  The field, which is set to produce 370,000 barrels of oil a day, started output this month. Also, OVL is actively pursuing exploration bid rounds in Australia, Bangladesh, Myanmar and Lebanon.

The OVL is also holding talks with PetroVietnam to rope in the Vietnamese oil major as a strategic partner in a block it owns in Vietnam.
The company had recently made two acquisitions in Mozambique — a 10 percent stake in the Rovuma area from Videocon for $2.47 billion and another 10 percent in the Rovuma from Anadarko Petroleum for $2.64 billion. ONGC, OVL’s parent company, has the right to borrow $10-15 billion from markets without affecting its credit ratings.

In Vietnam, OVL has one producing block and one exploration block. The block 128 is an offshore deep water block with 7,058 sq km area. OVL has so far invested about $49 million in the block.

The ONGC arm had recently raised $800 million in Singapore to part-finance its acquisition in an Azerbaijan oilfield. In 2012-13, OVL produced 7.26 million tonnes of oil and oil equivalent (mtoe) of gas, compared with 8.75 mtoe in 2011-12.