Oil India To Raise Up To $900m Debt To Fund Mozambique Buy

New Delhi, July 2, IRNA - State-run Oil India Limited Monday said it will raise up to $900m debt from overseas markets by October to pay for its acquisition of 4 per cent interest in a gas field in Mozambique. ˈThe total cost of our acquisition is around $1b and we will fund up to 80-90 percent of it through overseas markets,ˈ OIL Director (Finance) TK Ananth Kumar told reporters in Mumbai while announcing the companyˈs annual numbers. The company is already ˈgearing upˈ for meeting the formalities around the fund raising - which would be through loans or issue of bonds - as it has to pay Videocon, from whom it is jointly acquiring 10 per cent interest in the giant gas field in Rovuma Area 1 offshore block, by September or October, he said. The 10 per cent stake will be split 60:40 between ONGC Videsh Ltd (OVL) and OIL India. Oil India would like to leverage on its current debt-free status and also on lower interest rate offerings available overseas, Kumar said. ONGC Videsh, the dedicated overseas subsidiary of the state-run oil exploration giant ONGC, and Oil India, had last week announced to jointly buy Videoconˈs 10 per cent interest in the gas field for USD 2.48 billion. The field covers about 2.6m acres of deep waters in the Rovuma Basin, with an estimated recoverable resources of between 35 and 65 trillion cubic feet. Apart from raising money to fund its acquisition, the company has also applied to raise $250m through the external commercial borrowing route for its ongoing domestic capital expenditure plans, which stands at Rs 3,581 crore for FY14, Chairman and Managing Director S K Srivastava said. Just like its larger peer ONGC, Oil India has decided to form a dedicated unit for overseas operations, he said. The company will have to pump $1.66b over the next five years, or $400m a year, towards the development of the gas field and building of an LNG plant there, Srivastava said, adding, production from the facility will start from 2018. Being a state-run firm, Oil India is always in talks for acquiring more interests to secure the countryˈs energy requirements, he said, adding, it is currently scouting for two blocks in Africa./end