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ONGC approaches bankers to raise $ 600 m for Sudan project

Archana Chaudhary

Mumbai , Dec. 17

OIL and Natural Gas Corporation has approached Indian and foreign bankers to raise $600 million for financing a refinery expansion project in Sudan, which was awarded to its subsidiary, ONGC Videsh Ltd.

The company has asked banks to help raise a "non-recourse" debt to revamp and expand a three million-tonne refinery in Sudan and lay a 740 km pipeline, a senior company official said. A non-recourse debt would mean that in case of default, lenders would have to recover money from the asset itself and OVL would be directly responsible.

This is one the first major borrowings for ONGC, which had become a debt-free company since 2002-03. Mr Subir Raha, Chairman and Managing Director, ONGC, and senior officials of ONGC and OVL, including Mr R.S. Sharma, Director (Finance) and Dr C.M. Lamba, President (Projects) among others met representatives of 20-odd banks and lending institutions on December 10.

The total value of the expansion and pipeline project is $1.2 billion. Of this, OVL will bring in $600 million while a consortium of lenders will bring in the other half.

"The Cabinet had approved a budget of $1 billion for ONGC investments in Sudan. Since ONGC has already invested roughly half that sum in the Greater Nile project, it cannot bring in the entire investments needed for this expansion and pipeline project on its own," the official said.

VL's first project in Sudan was the Greater Nile Oil Project, joint venture with China National Petroleum, Malaysian company Petronas Carigali and Sudan National Oil Company, located at the Muglad basin. It is estimated to have a reserve of more than one billion barrels spread over 10 fields.

The Port Sudan refinery expansion and pipeline project is the second project that it won late last year. The pipeline, from Khartoum refinery to the Port of Sudan, was estimated to cost $200-300 million. The refinery revamp and expansion from 34,000 barrel a day to 71,000 barrels a day was valued at $400-500 million.

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