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ONGC Videsh plans to invest USD 5 Billion by 2028

New Delhi: 7 Jan-2024: ONGC Videsh, the wholly-owned subsidiary of the state-run oil major ONGC, has finalised plans to invest USD 5 Billion- (Rs 42,000 crore) to part finance its existing projects as well as acquiring new oil and gas assets abroad.

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According to highly placed sources, the company, the second largest E&P company in the country, will invest USD 1 billion ( Around Rs 8400 crore) every year for the next five years to accomplish its investment target for the next five years.

The company has also finalised plans for mopping up Rs 10,000 crore by issuing non-convertible debentures and commercial paper in the domestic market. Both the issues will be of Rs 5000 crore each.

The Rating agency India Ratings has already assigned “AAA” to the proposed NCDs and an “A1+” rating for commercial paper, which signifies the company, backed by its strong parent company ONGC, is stable.

This is one of the rare occasions that OVL is tapping the domestic market although its debt portfolio is largely dominated by foreign currency denominated because of its global nature of business.

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Tapping the rupee denominated instruments, one of the rare ones from the company, is being thought of to leverage the strength of its parent company-ONGC’s strong balance sheet, admits a senior official.

“ The next five years are going to be extremely challenging for the company (OVL) due to the extraordinary geo-political strife in the east Europe, Middle-East and in few African countries. These are the places where OVL has a large stake in various oil fields,” the official informs.

Another official said on condition of anonymity, “This is very crucial for us to weigh every project through a very stringent check-list even if they are from our friendly countries. However, it doesn’t mean that the strict project evaluation is slowing down investment plans. On the contrary, it is giving us lots of confidence for finalising projects. We are looking at doubling oil and gas equity in the next five years.”

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When asked wherefrom this additional oil and gas will mostly come, the official said there’s a number of good assets are now up for sale and we are quite hopeful for a big break in a couple of African countries. Sources said OVL is keen on Kenya where some “interesting opportunities” have come up.

OVL produced 6.349 MMT of Oil & 10.171 MMTOE of Oil & Gas in FY’23 which is 21.7% and 16.0% of India’s domestic production respectively (Source: PPAC). ONGC Videsh has 2P Reserves of 485 MMTOE of oil & gas as on 31st Match 2023.

Current Assets Portfolio
OVL has a stake in 32 oil and gas projects in 15 Countries, viz. 2 projects in Azerbaijan, 2 projects in Bangladesh, 2 projects in Brazil, 4 projects in Colombia, 1 project in Mozambique, 6 projects in Myanmar, 3 projects in Russia, 2 projects in South Sudan,1 project in UAE, 2 projects in Venezuela, 2 projects in Vietnam and other 5 dormant projects in 4 Countries.

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ONGC officials said OVL has adopted a balanced portfolio approach and maintains a combination of producing, discovered exploration and pipeline assets. Currently, OVL has oil and gas production from 14 Assets, 4 Assets where hydrocarbons have been discovered and are at various stages of development, 11 Assets are under various stages of Exploration and 3 projects are pipeline projects.

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