Loading up?: India's ONGC
ONGC mulls loan for asset chase
India’s state-owned Oil and Natural Gas Corporation (ONGC) may borrow $10 billion over the next decade, in a move to rival bids from China and South Korea for interests in overseas oil and gas fields.
“We still have surplus funds in our treasury and I’m not happy to be a zero-debt company,” ONGC’s chairman R S Sharma said in a Bloomberg interview
“We would like to borrow and leverage that for expanding our business,” he said.
The state-owned company completed India’s biggest overseas energy acquisition last year and had cash and short-term investments of 127 billion rupees ($2.7 billion) as of 31 March, according to Bloomberg data.
Its debt-to-equity ratio was 0.01. ONGC would like a ratio of 2, amounting to more than $10 billion of debt over 10 years as its net worth grows, Sharma said.
New Delhi-based ONGC produces almost 25% of the crude used by India, Asia’s third-largest energy consumer. Declining output at three-decade old domestic fields has forced the explorer to diversify its sources of supplies.
ONGC derives 15% of its revenue and 21% of its net income from overseas in the year ended 31 March 2009, according to data compiled by Bloomberg.
The state player is targeting annual production of 60 million tonnes of oil and gas overseas by 2025, about double India’s current output of 34 million tonnes.
ONGC, which is leading India’s search for resources, bought UK listed Imperial Energy for 1.4 billion pounds ($2.1 billion) and was part of a group that won a bid last month for a project in Venezuela.
The Imperial acquisition provides access to seven blocks in the Tomsk region of Western Siberia, which may produce 25,000 barrels of oil a day by the end of 2010, according to the company’s Web site.
ONGC was part of a Repsol YPF-led group that won a bid last month to develop the Carabobo 1 block in Venezuela’s Orinoco Belt.
In December, ONGC and the Hinduja Group also agreed to buy a 40% stake in the 12th project phase of Iran’s South Pars natural-gas field, according to Seifollah Jashnsaz, managing director of National Iranian Oil Company.
ONGC is also said to be interested to buy a stake in Devon Energy’s Azerbaijan oilfield, a rumour which Sharma has declined to confirm.
Devon expects all bids by midyear for the 5.6% stake, estimated to be worth $3 billion.