You are here: Home » Companies » News
Business Standard

ONGC mulls listing of OVL to raise funds for overseas assets

Press Trust Of India  |  New Delhi 

Oil and Natural Gas Corp (ONGC) is mulling listing its overseas investment arm ONGC Videsh Ltd (OVL) next year to raise funds for aggressive foreign acquisitions.

ONGC in its Perspective Plan 2030 has set a target of production of OVL’s overseas properties jumping to 20 million tons of oil and oil equivalent gas by 2017 and 60 million tons by 2030 from current over 9 million tons. “To achieve this, the company has to pursue aggressive acquisitions of both exploration and producing assets,” a source with direct knowledge of the development said. “These kind of targets need several billion dollars, all of which cannot come from its parent ONGC.”

To meet huge requirement, the company may go for an initial public offering (IPO) of at least 10 per cent equity shares. “Preparatory work for the IPO will begin in next few days,” he said. “The works involves preparation of updated financial accounts and appointment of independent directors.”

Thereafter, prospectus for the public offering would be prepared and merchant bankers appointed.

“The IPO is not likely before 2013,” the source said.

OVL, which 31 overseas oil and gas projects besides interest in a couple of pipelines, is nation’s second-largest exploration and production company. It is 100 per cent owned by ONGC.

ONGC held “very preliminary” discussion with merchant bankers including Kotak Mahindra to understand the process involved in listing, the source said.

Some brokerages have valued OVL at Rs 60,000 crore, adding Rs 71 to the value of the ONGC share. ONGC scrip closed at Rs 279.40 on the BSE yesterday.

OVL listing is being seen as a measure the government may be planning to boost market sentiments. “One way of boosting market sentiments could be raising diesel and cooking fuel prices. The other could be to list a profitable company like OVL,” an industry source said.

The government had way back in 2005 considered hiving off OVL from ONGC. Idea, mooted when Mani Shankar Aiyar was the Petroleum Minister, was to make OVL as the sole vehicle for acquiring overseas oil and gas assets.

The idea was to restructure OVL into an entity that would be jointly owned by public sector oil firms. This was to be done to avoid ‘confusing signals’ that go out when OVL and other state firms like Indian Oil, GAIL India pitch for a same overseas asset.

The idea was to restructure OVL on lines of Petronet LNG Ltd, which is jointly owned by ONGC, IOC, GAIL and Bharat Petroleum Corp Ltd.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Sun, June 24 2012. 00:23 IST