Confusion reigned on Friday when international agency reports, quoting sources in Russia?s Federal Anti-monopoly Services (FAS), said that the $2.6-billion acquisition of Russia-focused British oil company Imperial Energy Plc by state-owned ONGC Videsh Ltd (OVL) had been approved by Russian regulators. This led shares of Imperial Energy on the London Stock Exchange to rise by almost 24% to 1,100 pence.
Speaking to FE, OVL managing director RS Butola clarified that the company had not yet received any approval from Russian authorities for its acquisition of Imperial. OVL?s legal advisors also issued a statement in London saying the Commission on Monitoring Foreign Investment in the Russian Federation and the FAS were yet to approve the deal.
Since Imperial has assets in the Tomsk region of western Siberia, OVL had applied to the commission as federal law restricted ownership of ?Russian entities by entities controlled by a foreign government?.
Interestingly, IVL stands to gain close to $500 million from delays in approval from Russian authorities, as the pound sterling has depreciated by 20% since in August when the deal was announced. ONGC has committed to making payment for the acquisition in sterling. At the current rate, it will have to fork out $2.1 billion, against the original estimate of $2.6 billion.
If Kremlin approves, Imperial would be OVL?s biggest overseas buy. The company produced 10,000 barrels of oil per day in December 2007 and wants to raise this to 80,000 bpd by end- 2011, all of which can be shipped to India.