ONGC says no to OVL listing, can afford Imperial buy

ONGC says no to OVL listing, can afford Imperial buy
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First Published: Thu, Sep 04 2008. 10 56 AM IST
Updated: Thu, Sep 04 2008. 10 56 AM IST
New Delhi: Oil and Natural Gas Corporation today said it has no plans to list its overseas subsidiary ONGC Videsh Ltd (OVL) and has ‘ready cash´to meet fund acquisition of UK-listed Imperial Energy.
“It is absolutely nonsense. We have no plans to list OVL,” ONGC Chairman and Managing Director R S Sharma said while commenting on reports that ONGC may list OVL to fund the $2.58 billion acquisition of Imperial Energy.
OVL had last month won approval of Imperial board for its 1,250 pence a share bid (1.42 billion pounds) and it now awaits approval of Kremlin to takeover the company which has assets in Tomsk region of the western Siberia in Russia.
“Where is the question of going to public when parent ONGC has ready cash to fund the acquisition? There is absolutely no need (for OVL listing). Funding is in place for Imperial buy,” said Sharma who is also OVL’s Chairman.
China’s Sinopec was initially interested in Imperial and had made an offer even before it completed due diligence of the company. But after OVL’s offer was accepted by Imperial board, Sinopec announced that it was not considering making a counter offer, putting to rest talks of an Indian-Chinese contest for control of the company.
Petroleum Minister Murli Deora has already spoken to Russian President Dmitry Medvedev about Imperial acquisition and New Delhi is confident that Kremlin will approve the deal.
If Kremlin approves, Imperial would be biggest overseas acquisition for OVL. It had paid $1.7 billion to buy a stake in Exxon Mobil Corp’s Sakhalin-I field in Russia and $785 million for a stake in the Greater Nile project in Sudan, both in 2003.
The board of Imperial had last month recommended OVL’s 1,250 pence a share bid, but it has to win approval of Russian authorities to materialise. The Kremlin may want the Indian firm to sell part of the Imperial stake to a Russian state oil group such as Rosneft, which OVL is open for doing so.
Kremlin has in recent years increased its control of the Russian oil. State-backed firms managed majority stakes in big, formerly privatised energy assets.
In 2006, Sinopec bought Udmurtneft, a 120,000 barrels per day crude production unit from BP’s Russian unit TNK-BP for about $3.5 billion but later sold a 51% stake to Rosneft.
Officials said they were hopeful of Russian support for OVL which must quickly for Sinopec may make a counter bid.
“We have good relations with the Russian government and we hope we will get clearance soon,” OVL Managing Director R S Butola had said on Tuesday.
Imperial Energy will give OVL, which already has a 20% stake in Sakhalin-1 project in Far East Russia, access to Siberia, an area believed to hold huge hydrocarbon deposits.
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First Published: Thu, Sep 04 2008. 10 56 AM IST
More Topics: Ongc | Kremlin | Imperial Energy | Russia | Takeover |