OVL to raise up to $1 billion via dollar issue to fund Azerbaijan buy

NEW DELHI: ONGC Videsh, the overseas arm of state-owned Oil & Natural Gas Corp (ONGC), on Tuesday said it aims to raise up to $1 billion through a dollar issue this month to fund its recent acquisition in Azerbaijan.

OVL last week concluded a $1.001 billion deal to buy US energy major Hess Corp's 2.7% stake in the Azeri, Chirag and Guneshli oilfields in Azerbaijan, and 2.4% of the associated BTC pipeline.

"It makes sense to raise cheaper debt through overseas bond issuance," OVL Managing Director Dinesh K Sarraf told reporters on the sidelines of an industry event here. The company had initially planned to issue its maiden overseas bond between January and March, but delayed it to complete the acquisition.

He said refinancing was easier since all of OVL's assets and liabilities are denominated in dollars.

The company, which gets most of its funds from its parent firm, has already appointed merchant bankers for raising the debt, a source said. "There is no doubt that dollar debt is cheaper than rupee borrowings," he said.

The Azerbaijan acquisition was OVL's biggest since 2009 when it bought UK-listed, Russia-focused Imperial Energy for $2.1 billion.

ACG, which is located in the south Caspian Sea, about 95 km off the coast of Azerbaijan, is the largest oil and gas field complex in Azerbaijan and one of the largest producing oil fields in the world.