MOSCOW (MRC) -- Oil & Natural Gas Corp., India’s biggest energy explorer, is seeking to sell to strategic investors a 25% stake each in two petrochemical ventures and a power project before taking the units public, said Hydrocarbonprocessing.
Talks are on with a number of potential buyers for stakes in ONGC Petro-additions Ltd., ONGC Mangalore Petrochemicals Ltd. and ONGC Tripura Power Co., ONGC finance director Aloke Kumar Banerjee said. The holdings could together fetch at least USD1 billion based on the investments the projects require, according to Dhaval Joshi, a Mumbai-based analyst with Emkay Global Financial Services.
State-run ONGC is betting on Prime Minister Narendra Modi’s initiative to attract foreign investment into India in sectors including energy by easing controls on fuel pricing. The country’s benchmark stock index has risen 16% to a record since Modi swept to power in May with the biggest mandate in 30 years.
ONGC will own 26% in ONGC Petro-additions, GAIL India Ltd. 15.5% and Gujarat State Petroleum Corp. 5% after the stake sale and public offer, according to ONGC’s annual report. ONGC Petro-additions will spend 214 billion rupees (USD3.5 billion) to build a petrochemical plant in the western state of Gujarat, according to ONGC.
ONGC and unit Mangalore Refinery & Petrochemicals Ltd. will offer 51% to large investors and the public after keeping 49%, Banerjee said. The company is building a plant in Mangalore on India’s west coast that will produce paraxylene and benzene, a raw material for making plastic, dyes and detergents.
ONGC will eventually own 50% of ONGC Tripura, while IL&FS Energy Development Co. will have 26% and the government of the northeastern state of Tripura 0.5%. The venture operates a 727 megawatt power station that uses natural gas from ONGC’s fields in the region. The plant cost 40.47 billion rupees to build, according to the annual report.
The S&P BSE India Oil & Gas Index, which comprises 10 stocks, has gained 23% this year, while ONGC has surged 36%. The government freed diesel prices from its control and increased natural gas prices by 33% last month.
As MRC wrote before, ONGC Mangalore Petrochemicals Ltd (OMPL)'s Mangalore plant commenced regular commercial production of benzene and paraxylene from October 1.
Oil and Natural Gas Corporation Limited (ONGC) is an Indian multinational oil and gas company headquartered in Dehradun, India. It is one of the largest Asia-based oil and gas exploration and production companies, and produces around 77% of India's crude oil (equivalent to around 30% of the country's total demand) and around 81% of its natural gas.
MRC