Russia On Tuesday ruled out the possibility of setting any pre-conditions for ONGC Videsh Limited (OVL). It says no conditions such as asking for a stake for its state-run firms in exchange for giving approval to the acquisition of Imperial Energy Corp Plc by OVL has been put.

?Actually our approach towards this deal is quite liberal and if the Indian company would like to acquire Imperial Energy, we are not going to put forward any demands,? visiting Russian energy minister Sergey Shmatko said on the sidelines of the India-CIS round table on energy organised by FICCI and the petroleum ministry.

OVL, the overseas arm of state-run Oil and Natural Gas Corp (ONGC), was expecting that it might have to give 25-40% stake to a Russian company Rosneft in lieu of the regulatory approvals Kremlin gave for its acquisition of UK-listed firm. Alongside, the fall in international oil prices notwithstanding, ONGC Videsh Ltd has said it would not revise its 12.50 pounds a share buyout of Imperial Energy Corp Plc.

?OVL has valued Imperial?s 2P (proven and probable) oil and gas reserves at $2.5-3 per barrel and the acquisition even at current oil prices is enormously beneficial,? said a source associated with the transaction.

Imperial explores oil in Russia?s Siberia region and had the equivalent of 920 million barrels of proven and probable oil reserves as on December 2007, according to an audit by DeGolyer & MacNaughton. ?2P? tag means a 50 % likelihood of recovery of the reserves.

Acquisition of Imperial will cost OVL, the overseas arm of state-run Oil and Natural Gas Corporation, about 1.4 billion pounds or $2.1 billion at current exchange rates. ?OVL had the option of revising bid price but it is not considering doing so,? he said.

Crude oil prices were trading at $115-120 a barrel when OVL made the bid for Imperial in August. They are now around $50 per barrel and Imperial shares are at 10.71 pounds. OVL has time till December 9 to make an offer to acquire all outstanding shares of Imperial. The offer will remain open for 28 days and OVL will take another 14 days thereafter to make payments to shareholders tendering their shares, he said.

All of the funding for the acquisition is in place. ONGC is lending most of the money to OVL at 6% interest rate while $one billion has been tied up in bridge loan. ?Borrowings have become expensive…they are charing Libor plus 3-4%,? the source said.

OVL, won Russian government approval for taking over Imperial, which has assets in Tomsk region of western Siberia. Russia?s Federal Anti-Monopoly Service (FAS) granted approval in respect of the ownership of Russian entities controlled by a foreign government. Government of India holds 74 % stake in ONGC. Prior to this, FAS cleared the acquisition under anti-monopoly regulations and stated that Imperial?s assets were not strategic. Since July, Imperial is producing 11,000 barrels of oil per day. Output will reach 25,000 bpd by fiscal-end with 18 wells coming on stream. Production would rise to 35,000 bpd by 2009-end.