The Hindu Business Line : ONGC to transfer stake in Syrian oilfields to OVL

Oil and Natural Gas Corporation (ONGC) proposes to transfer its stake in the recently acquired oilfields in Syria to ONGC Videsh Ltd (OVL), the overseas arm of the company. ONGC is likely to take up the issue at its next board meeting.

A company source told Business Line that the matter was scheduled for the recently held board meeting of the company on March 3, but was deferred. The transfer of stake would strengthen OVL's holding in the jointly acquired equity shares of Petro-Canada in Syrian oilfields, he said.

Besides, it would also help in operational and accountancy issues. Most of ONGC's overseas properties are currently managed through OVL.

Last December, ONGC and China National Petroleum Company International (CNPCI) had won a bid to acquire about 37 per cent stake in Syrian oilfields of Canadian oil company Petro-Canada for 484 million. While the CNPCI's equity came through its subsidiary Fulin Investments SARL, ONGC directly funded 55 per cent of OVL's share amounting to $156.75 million through ONGC Nile Ganga. The balance 45 per cent came from ONGC-Mittal Energy Ltd (OMEL). The total exposure of ONGC group in the project came to $222.1575 million or Rs 995 crore.

Being a navratna company, ONGC can either directly or through its subsidiary acquire assets. Since the size of this particular asset was beyond the current prescribed investment limit of OVL ($75 million or Rs 300 crore, whichever is less), the company had participated in the acquisition directly through ONGC Nile Ganga BV. It had also roped in OMEL. In both the cases, OVL was indirectly involved. In December 2005, ONGC Nile Ganga BV entered into an agreement with the Chinese company to acquire the entire share of Petro-Canada's stake in four production sharing contracts covering 36 producing fields in Syria.