ONGC Hopeful of Concluding Stake Buy in Kazakh Oil Field
NEW DELHI - ONGC Videsh Ltd. hopes to complete its $5.5 billion deal to buy a minority stake in an oil field in Kazakhstan from ConocoPhillips, and plans to raise $4 billion in foreign debt to part fund the acquisition, a senior executive at the unit of Oil & Natural Gas Corp. said Friday.
ONGC Videsh, which invests in energy projects outside India, signed an agreement in November to buy ConocoPhillips' 8.4% stake in the oil field. The deal is the biggest by an Indian oil and gas company for an overseas asset.
But delays in getting approvals from both the Indian and Kazakhstan governments have raised doubts over the deal. A note last month from analysts at Eurasia Group said the Kazakh government would likely veto the sale in favor of a Chinese buyer as that country looks to strengthen its energy-sector relations with China.
Uncertainty over the deal has intensified with India's cabinet Thursday deferring a decision on the deal.
Oil & Natural Gas Corp., which fully owns ONGC Videsh, is state-owned and needs the approval of the government for major overseas acquisitions.
"The company hasn't heard anything negative yet on the deal from either Kazakhstan or the Indian government," said the executive who has direct knowledge of the matter.
He didn't want to be named due to the "commercial confidentiality" of the matter.
The executive said the company could raise the debt through bonds and loans.
If the deal falls through, it would be a major set back to India's plans to acquire hydrocarbon assets overseas to secure energy supplies. The country meets 75% of its energy requirement through imports.
Two Indian government officials told The Wall Street Journal that the government could be taking time to assess whether it would be worth going for such an expensive acquisition.
According to the terms, the deal would fall through if it doesn't get the approvals from the two governments before the last week of July, unless the deadline is extended.
The ONGC Videsh executive said the Kazakh government may take a final decision by the end of May.
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