ONGC has the appetite and the ability to fund its acquisition plans. I would like to fund such acquisitions by way of borrowed funds. However, if I have my own funds, I would first like to use them instead of borrowing from the market. Today, ONGC has cash surpluses of around $4 billion, the CMD said.
Since ONGC is a zero-debt company with a net worth of $16 billion, On a debt-equity ratio of 0.5:1, we can immediately raise $10 billion. Then we have $4-5 billion with us as cash surplus. We also have bonds and stakes in sister PSUs. Therefore, funds are not a problem for ONGC, Sharma added. According to him ONGC could, therefore, raise $20 billion within a six-month period.
Of this corpus, Sharma said overseas arm ONGC Videsh Ltds investment in Iran would be about $4-5 billion. The company will develop the two discovered oil and gas fields: the South Pars Phase 12 project and the Azadegan oil field.
The companys overseas hunt received a shot in the arm on Wednesday when its joint venture company with steel baron LN Mittal, ONGC-Mittal Energy Ltd. (OMEL), beat Britains Centrica plc to bag an exploration block with estimated gas reserves of 2 trillion cubic ft in the Caribbean islands of Trinidad & Tobago. This is OMELs second largest success after Nigeria where it has acquired two exploration blocks.
In another related development, OVL said it would invest $355 million to take a 40% stake in the San Cristobal oil field in Venezuela. Venezuelan national oil company Petroleos de Venezuela will hold the remaining 60% through a subsidiary.
Mittal had in July 2005 inked a joint venture agreement with ONGC Videsh to acquire oil and gas fields, refinery businesses and liquefied natural gas projects in 27 countries.