New Delhi: India’s biggest exploration company, Oil and Natural Gas Corporation or ONGC, has said the current financial crisis will not affect its plans to buy UK’s Imperial Energy Plc. ONGC, which agreed to buy Imperial Energy at 1.4 billion pounds, last month said it might take a $1 billion bridge loan to partly fund the purchase.
”We’ll not be entirely dependent on that (bridge loan). … That was as a matter of due diligence that we wanted to have bankers also, those who have helped us in financial due diligence to take part in funding process…if need be, we have the liquidity available with us,” ONGC Chairman R S Sharma said at an Energy Summit organized by industry body Assocham in New Delhi on Friday.
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Crude prices decide the value of acquisitions in the oil and gas sector as they indicate the monetary value of the reserves in ground.
Sharma said ONGC had not slowed down on overseas acquisition because of a slide in crude oil prices. Instead he said the company would in fact continue to pursue acquisitions aggressively.
“We have not slowed down. We in fact feel it is suitable time for stepping up the ante,” he said, adding the company at any given point of time would be looking at 6-10 opportunities.
According to Bloomberg Data, the company had almost $5 billion in cash and deposits, including short-term investments as of March this year.
When asked whether the fall in crude oil prices were denting ONGC’s margin, Sharma said, ”The impact is going to be diluted.”
He said that the depreciation of the rupee against the dollar has helped the company’s overall revenues. He added he did not see crude oil prices staying at the current levels.
”When we talk of fundamentals, fundamentals say that prices are going to remain firm. Today’s situation of oil at $70/barrel is not because of market forces or fundamentals”. Sharma said the cooling down of the oil prices was due to a fall in artificial demand.