ONGC Videsh (OVL) on Wednesday said it was seeking financial powers to invest up to $1 billion without government approval. Currently, the overseas arm of ONGC,can independently decide on investment of up to Rs 300 crore. An investment decision higher than this needs to be ratified by the PM-headed Cabinet Committee on Economic Affairs (CCEA). “We are seeking at least Navratna PSU status for OVL… $1 billion investment powers should be granted to us,” Narendra K Verma, managing director of OVL, said.
The MD said Rs 300 crore financial power for OVL was set in 2000 when the rupee-dollar exchange rate was completely different. “Right now Rs 300 crore is nothing,” he said.
OVL has 35 projects in 16 countries from Brazil to New Zealand and is looking at certain acquisitions in oil and gas rich regions. Verma hinted that OVL is contemplating selling stake in some exploration assets and buying equity in ‘five-six’ new projects.
Meanwhile, once OVL gets the Navranta tag, it should be listed on stock exchanges. “Listing is a requirement but exemptions can also be granted,” he said. “I don’t think this is the ideal time to list an oil exploration company. Low oil prices are not ideal time for listing…Our portfolio predominately consists of exploration assets and a few producing properties. Markets typically do not fully value exploration assets and all our exploration assets will not get true valuations,” he explained.
Moreover, hitting the bourses would lead to certain other stipulations including change of ownership. “Currently we are seamlessly integrated with ONGC and all our requirements of funds, technology and manpower are fully met from ONGC. Listing will change that,” he said.
In FY15, OVL’s output went up by 6% to 8.87 million tonne of oil equivalent (mtoe) against 8.36 mtoe in FY14. This fiscal, it targets to cross 9 mtoe output. Higher output is expected from its projects Sakhalin-1 in Russia, Carabobo-1 in Venezuela, Azerbaijan, and the ones in Brazil, while it would be a full year of production from its Myanmar asset.