Oil India to Take $500mn Loan to Fund Vankorneft Deal

State-run Oil India (OIL) is set to take a $500-million bridge loan to part-finance the acquisition of two hydrocarbon blocks owned by Rosneft in east Siberia, Business Standard reported on Monday.

Russian state owned Rosneft signed a sale-purchase agreement with a consortium of Indian companies to sell 23.9 percent stake in its subsidiary, Vankorneft. Companies led by Oil India along with Indian Oil Corporation Ltd. and Bharat PetroResources signed the agreement at the St. Petersburg International Economic Forum earlier this year.

Vankorneft is a 100-percent subsidiary of Rosneft, and Vankor is the largest oil and gas field discovered in Russia in the past 25 years. The field is located in the north of eastern Siberia. Plans are in place to produce about 500 million tons of oil and about 182 billion cubic metres of gas jointly by the Russian and Indian sides at this field alone.

In a separate deal, another Indian state owned firm ONGC Videsh (OVL) picked up a 15% stake in Vankorneft for $1.27 billion. ONGC, the parent company of OVL, last month raised $1 billion through dollar bonds issue to finance the acquisition.

The Oil India led consortium will be paying nearly $4 billion to acquire stake in Taas-Yuryakh oil & gas fields and Vankor oil field in East Siberia, Business Standard added.

For the remaining part of its share of $1 billion in the deal, Oil India may depend on its cash reserves.

The Indian consortium will be taking around 30 per cent stake in Taas-Yuryakh field and 24 per cent stake in Vankor fields.