The Hindu Business Line : ONGC Videsh close to buying out Imperial

New Delhi, Dec. 30 ONGC seems to be closing in on acquiring London Stock Exchange-listed Imperial Energy Corporation PLC for £1.4 billion. Late reports were coming in that ONGC was close to receiving acceptance from more than 90 per cent of the shareholders for its bid of pence 12.50 a share offer.

ONGC is routing this deal through its overseas investment arm, ONGC Videsh Ltd (OVL). OVL had to receive the nod from more than 90 per cent of the shareholders for the deal to go through. OVL is acquiring Imperial through its Cyprus registered wholly owned subsidiary, Jarpeno Ltd.

Since OVL unveiled the deal in August, oil prices have slumped from around $130 a barrel to $40, casting doubts on the economics of the takeover.

Fresh nod

Earlier this month, OVL had to secure a fresh approval of the Cabinet as the Internal Rate of Return from the planned acquisition had climbed down from the projected 10 per cent at the time of the bid to 3-4 per cent at the current crude prices.

The acquisition is the largest overseas buy of ONGC Videsh.

Earlier in 2003, it paid $1.7 billion to buy a 20 per cent stake in Exxon Mobil Corp’s Sakhalin-1 field in Russia. In the same year it paid $785 million to acquire a stake in the Greater Nile project in Sudan.

Imperial, a relatively small British oil and gas company based in Leeds in the UK, has oil producing blocks in Tomsk region of western Siberia in Russia and Kastanai in north-central Kazakhstan.

When the Union Cabinet approved the proposal in August this year, Imperial was producing around 7,000 barrels of oil a day, targeting to increase the production to 25,000 bpd by the end of this year and touch 80,000 bpd by the end of 2011. The production is likely to go up to 1,30,000 bpd by the end of 2015.

Imperial has in place reserves of about 3.4 billion barrels of oil equivalent and the takeover would increase ONGC’s reserves by around 20 per cent, sources said.

Russia, focus country

Russia has been identified as a key focus country by OVL, which has been mandated by the Government to secure energy supplies overseas so as to fuel the country’s growing economy. In the past seven years, OVL has increased its number of projects to 39 in 17 countries from just a single project in Vietnam earlier.

Related Stories:
Imperial bid: OVL gets a fair deal in valuation
OVL to make formal bid for Imperial Energy soon

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