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Zainab Calcuttawala

Zainab Calcuttawala

Zainab Calcuttawala is an American journalist based in Morocco. She completed her undergraduate coursework at the University of Texas at Austin (Hook’em) and reports on…

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ONGC Prepares To Offload $5 Billion In Assets To Pay Debts

Oil Industry

India’s Oil and Natural Gas Corp. will sell two state-run energy companies to raise capital for debt repayment within the next year, according to a new report by Bloomberg.

The debt was a result of the company’s purchase of the Hindustan Petroleum Corp. (HPCL), people close to the matter said. Shares of Indian Oil Corp and GAIL India Ltd. could be sold off to pay for the deal, which is still pending approval from the government.

ONGC wants to return to its previous debt-free status to begin purchasing stakes in foreign projects as Indian oil demand rises with the size of its middle class population. ONGC currently owns 13.77 percent of Indian Oil and 4.83 percent of GAIL. Selling the stakes could raise almost $5 billion – enough to pay back 90 percent of existing loan burdens.

“We will use our cash balance first and then liquid assets. Debt will be last,” ONGC Chairman Shashi Shanker had said on Jan. 22, while announcing the HPCL deal that was completed on Jan. 31. “We will take a call on selling if the market is favorable, but we won’t sell anything in distress.”

India has been ramping up its relationship with Israel in recent months, with New Delhi even promising bids on a coming oil and gas licensing round.

“We will definitely bid for Israel’s oil-and-gas blocks,” Oil Minister Dharmendra Pradhan told Reuters, after Indian Prime Minister Narendra Modi visited Israel in July, which laid the foundations for wider industry cooperation between the two countries, including in the energy sector.

The follow-up visit by Indian energy companies included representatives of India’s oil ministry and managers at IOCL, OVL, BPCL, and Hindustan Petroleum, Israel’s Ministry of Energy noted.

By Zainab Calcuttawala for Oilprice.com

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