Bharat Petroleum plans to raise $500 million through bonds or ECB

Mumbai: Bharat Petroleum Corp. Ltd (BPCL) is planning to raise $500 million through a bond issue or an external commercial borrowing shortly, two people aware of the development said.

The state-run refiner will use the money to refinance a bridge loan it took to buy stakes in Tass-Yuryakh and Vankor, two oil fields operated by Rosneft OAO, a Russian government-owned energy giant. “BPCL is planning to raise funds to refinance an earlier loan taken for its Russian asset buy. The funds would be raised through a bond issue or an external commercial borrowing,” said an investment banker, one of the two people mentioned above.

A BPCL official confirmed the plan. “Yes, we will be raising funds to refinance the earlier loan. We would be raising funds either through a bond issue or external commercial borrowing for long term to refinance the bridge loan. We will be deciding on the fund raise in a few weeks from now,” said the official, the second of the two people mentioned above. Both spoke on condition of anonymity.

BPCL did not respond to an email sent on Friday.

In July, Mint reported that a consortium of Indian Oil Corp. Ltd (IOC), Oil India Ltd and BPCL raised a $2 billion bridge loan for the stake purchase.

A bridge loan is a short-term loan for a period of two weeks to three years, till an arrangement of larger or longer-term financing is made.

The cabinet, on 28 September, approved the stake purchases for $3.14 billion.

IOCL, Oil India and BPCL will jointly buy 29.9% stake in Taas-Yuryakh oilfield in East Siberia for $1.12 billion and 23.9% in the Vankor oilfield for $2.02 billion. The Vankorneft field is Russia’s second largest by production, pumping about 4% of the country’s oil output.

It currently produces about 422,000 barrels of oil per day. It is the largest field discovered and commissioned in Russia in the last 25 years.

The Vankorneft deal will provide 6.56 million tonnes of oil equivalent (mmtoe) and the 29.9% stake in Taas-Yuryakh will provide 0.5 mmtoe initially and 1.5 mmtoe by 2019.

“The acquisition is in line with India’s stated objective of adding high-quality international assets to its exploration and production portfolio and thereby augmenting India’s energy security,” the 28 September statement from the petroleum ministry said.

In May 2016, ONGC Videsh Ltd (OVL) completed the formalities of acquiring 15% stake in Vankorneft at $1.284 billion, which gave OVL 4.11 mmtoe.

“The acquisition will add 8.06 mmtoe to India’s overseas oil and gas asset. It will also provide an opportunity to Indian public sector oil and gas companies to absorb newer technologies with Rosneft and British Petroleum (BP). BP acquired 20% stake in Taas-Yuryakh from Rosneft last year,” the statement added.