Oil India, BPCL to issue bonds for Russian buy

Oil India and BPCL will use the money to refinance a bridge loan taken to buy stakes in Tass-Yuryakh and Vankor, two oil fields operated by Rosneft OAO


IOCL, Oil India and BPCL will jointly buy 29.9% stake in Taas-Yuryakh oilfield in East Siberia for $1.12 billion and 23.9% in the Vankor oilfield for $2.02 billion. Photo: Ramesh Pathania/Mint
IOCL, Oil India and BPCL will jointly buy 29.9% stake in Taas-Yuryakh oilfield in East Siberia for $1.12 billion and 23.9% in the Vankor oilfield for $2.02 billion. Photo: Ramesh Pathania/Mint

Mumbai: Overseas units of state-run Oil India Ltd and Bharat Petroleum Corp. Ltd (BPCL) will sell bonds in a few months to raise as much as $750 million to fund their Russian acquisitions, two people aware of the development said.

“Both companies are planning to raise funds through dollar bond issues through their overseas exploration and production arms. The issue is of $500-750 million size,” an investment banker aware of the fund-raising programme said on condition of anonymity as he is not allowed to speak to reporters.

The companies will use the money to refinance a bridge loan taken to buy stakes in Tass-Yuryakh and Vankor, two oil fields operated by Rosneft OAO, a Russian government-owned energy giant.

BPCL and Oil India did not respond to emails sent on Monday.

A BPCL official confirmed the plan but declined to divulge further details.

Another BPCL official said, “We have plans but the details have not been finalized yet.”

Both spoke on condition of anonymity.

Indian Oil Corp. Ltd (IOCL), Oil India and BPCL had earlier this year raised a $2 billion short-term loan for the stake purchase.

IOCL, Oil India and BPCL will jointly buy 29.9% stake in Taas-Yuryakh oilfield in East Siberia for $1.12 billion and 23.9% in the Vankor oilfield for $2.02 billion.

While the Vankorneft deal will provide 6.56 million tonnes of oil equivalent (mmtoe), the 29.9% stake in Taas-Yuryakh will provide 0.5 mmtoe initially and 1.5 mmtoe by 2019.

“The acquisition is in line with India’s stated objective of adding high-quality international assets to its exploration and production portfolio and thereby augmenting India’s energy security,” a 28 September statement from the petroleum ministry had said.

The Vankorneft field is Russia’s second largest by production, pumping about 4% of the country’s oil output.

In May 2016, ONGC Videsh Ltd (OVL) completed the formalities of acquiring 15% stake in Vankorneft at $1.284 billion, which gave OVL 4.11 mmtoe.

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