ONGC Videsh (OVL), the overseas investment arm of flagship explorer Oil and Natural Gas Corporation (ONGC),used to be India's cash cow, which helped to create many oil and gas assets in international market in various African countries. But the same banker company has to now restore to pledging the future oil production to raise up to $700 million for bankrolling the over $4-billion acquisition of stake in a Mozambique gas field.
OVL had teamed up with Oil India (OIL) to pick up Videocon’s 10% stake in Mozambique’s Rovuma Area-1 filed for $2.4 billion. It followed up this deal by picking up another 10% stake in the same field from US major Anadarko Petroleum for $2.6 billion. The 10% Videocon stake is being shared in the ratio of 60:40 between OVL and OIL.
ONGC Videsh MD S P Garg said,“For the acquisition, we raised a bridge finance (or short-term loan) of $1.5 billion.To purchase of Anadarko stake, we had raised a five year term loan of $1.7 billion and $725 million in bridge finances,”.
The importance and value of such deals can be derived from a similar deal : {In 2005, Russian giant Rosneft had pledged oil supplies for 25 years to China for a $6-billion loan from Chinese banks to fund its buyout of Mikhail Khodorkovsky-led Yukos Oil. Russian President Vladimir Putin recently valued that deal at $60 billion, while Rosneft chief Igor Sechin put it at $270 billion, seemingly multiplying the $100-a-barrel price by the number of barrels to be delivered to China. }
The bridge finances have to be repaid or replaced with a syndicated loan within one year. This lays down a deadline of January 2015 for the $1.5-billion raised for the Videocon deal and February 2015 for the $750 million mopped up to fund the Anadarko transaction.
OVL's MD S P Garg said the company took to borrowings for the first time in its history to fund its Mozambique acquisition.The bridge finances have to be repaid or replaced with a syndicated loan within one year. This lays down a deadline of January 2015 for the $1.5-billion raised for the Videocon deal and February 2015 for the $750 million mopped up to fund the Anadarko transaction.
INDIA HONEST regrets on the plight of this UPA 2 Government, whose Finance Minister has failed India on all economic fronts ,say it inflation, GDP growth, CAD and fiscal deficit.
The manipulative finance minister Chidambaram has misrepresented facts on fiscal deficit before the election,as most of the subsidy adjustment including the dues of oil companies have been misappropriated to next financial year making companies like ONGC and OVL almost bankrupt in one sense.
That forced even the ONGC Videsh MD Garg has to say that we have take the borrowings for the first time in its history and opt to pledge/sell the black gold assets of India to foreign companies including the Chinese bankers, who are our biggest and tough competitor in accumulating oil assets world over. Chidambaram and Congress defeated India before China,while looting India's coffers in huge corruption scams .