India's Videocon Considers Divesting Upstream Assets to Repay Debts

Videocon Industries Ltd., a subsidiary of India's conglomerate Videocon Group, is exploring the option of divesting its upstream oil and gas assets to repay debts as global crude oil prices rose above $50 a barrel, Group Chairman Venugopal N Dhoot said, as reported Friday by local media Business Standard.

After crude oil prices dipped to a 13-year low of $27 a barrel in February, global benchmark Brent crude touched $52 a barrel last week, a development that provided some relief for Indian conglomerates such as Reliance Industries Ltd. and Videocon Industries, which owns upstream oil and gas assets around the world.  

“The group is repaying all its loans in time. With oil prices peaking again, we are now reviving plans to sell off our oil and gas assets,” Dhoot said.

According to the Business Standard, Videocon's exploration blocks in Brazil were valued at $7.47 billion (INR 500 billion) at the peak of global oil prices.

Most of its upstream hydrocarbon assets are concentrated on Brazil, with details on Videocon's wesbite showing that the company holds four petroleum concessions in the South American country, comprising 10 exploration blocks. It partnered Brazil's national oil company Petroleo Brasileiro SA (Petrobras) in the BM-SEAL-11 Sergipe, BM-POT-16 Potiguar, BM-ES-24 Espirito Santo and BM-ES-24A Concessions, while working with Anadarko Petroleum Corp. in BM-C-30 Campos Concession.

Videocon also owns upstream assets in Asia, holding a 12.5 participating interest in the Nunukan Block in Indonesia as well as a 20 percent stake in the offshore JPDA 06-103 block in the Joint Petroluem Development Area in the Timor Sea.

The hopes of raising funds, through possible sale of Videocon's upstream oil and gas assets, has come into focus for the firm recently. The Business Standard cited a senior executive working in a public sector bank as saying that lenders are assessing if Videocon's cash flow issues are short-term or not.

In January 2014, Videocon completed the sale of a 10 percent stake in Offshore Area 1 in the Rovuma Basin in Mozambique for $2.5 billion (INR 150 billion) to Indian state-owned ONGC Videsh Ltd. and Oil India Ltd. to repay loans.

Chee Yew has covered the upstream and downstream sectors of the oil and gas industry in Asia for more than 15 years. Email Chee Yew at cheeyew.cheang@rigzone.com

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