Kolkata: State-run Oil and Natural Gas Corporation will treat the entire funding of $2.8 billion for the proposed takeover of LSE-listed Imperial Energy Corporation by its foreign arm ONGC Videsh as loan in its book.
“There is no need to change the capital structure in ONGC Videsh despite its large takeover bid for Imperial. The entire funding will be provided as loan to them,” ONGC Chairman and Managing Director R S Sharma said.
“We have already provided financial support to ONGC Videsh to the tune of Rs12,000-13,000 crore in the past as loan,” he said.
The capital of ONGC Videsh isRs1,000 crore and the takeover of Imperial will take another Rs11,200 crore approx.
Asked how ONGC will fund the acquisition, Sharma said, “We are a cash rich company and funding is not a problem. ONGC has reserves of about $4.3 billion and out which cash of $2 billion.
“We will go for $1 billion bridge funding and rest $1.8 billion would be from internal resources,” Sharma said.
He said, “The 45 days from the bid are very crucial. I am deliberately not speaking much on details as it may create problems. If everything runs smoothly, we expect to crystallise the deal in the next 45 days.”
Enhancement of output is very crucial to put the company back in black. Sharma, however, declined to put a time-frame for the planned investment.
Sources indicated that ONGC may rope in Rosneft Oil Company of Russia as its local partner in Imperial Energy. The Indian energy major has an existing relationship with Rosneft for its oil equity in Russia’s Siberia region.
Imperial, a relatively small British oil and gas company based in Leeds, the UK, has oil producing blocks in Tomsk region of western Siberia in Russia and Kastanai in north- central Kazakhstan.
It produced about 10,000 barrels of oil per day in December 2007, and was targeting to raise this to 80,000 barrels a day (four million tons a year) by the end of 2011.