ONGC Videsh demands Rs 1,000-cr equity addition

New Delhi, Oct 8: ONGC-Videsh on Monday demanded an additional Rs 1,000 crore as equity to bid aggressively for ‘high risk’ oil blocks abroad, even as it received Rs 200 crore to raise paid up capital to Rs 500 crore.

“We received Rs 200 crore as additional equity from ONGC today. The ONGC board had approved the additional equity support to OVL (a 100 per cent overseas arm of the navratna PSU) at its board meeting late last month,” ONGC-Videsh (OVL) director (finance) NC Pany said.

“In addition, we want another Rs 1,000 crore as equity to put the company in a strong financial position to undertake bids for oil equity abroad on a sound footing,” he said. Unless the company makes a solid financial base, he said “it would be difficult to compete with the MNCs at global level during the initial bidding phases”.

OVL, which has identified about 18 oil properties abroad for possible participation, has taken up the issue of equity expansion both with the Government and ONGC, Mr Pany said.

Sources in the petroleum ministry said that request of OVL had reached the Government and could be favourably considered, particularly in the wake of the company clinching the deal for 20 per cent equity participation in Sakhalin oilfields in Russia.

OVL, which lost about Rs 89 crore in its initial three ventures abroad, would surpass oil and gas reserves of parent company ONGC by the year 2006, Mr Pany said, adding that his company’s basic objective was to achieve “oil security” for the country for which “overseas contracts are a must”.

This would necessitate huge initial investments in developing projects and taking oil equity in the projects in advance stages, he said emphasising that was the reason for OVL to seek equity enhancement to Rs 1,500 crore through Government support.

Mr Pany, however, declined to provide details of the other oil properties for which OVL is holding negotiations.

The OVL official said the comany would wipe out its accumulated losses, which were placed at about Rs 72 crore by March 1997, during the current financial year itself and then start generating surpluses.

— PTI