The Rs 100-crore loan, if approved by ONGC, would later be converted as equity of the parent company, they said.

The amount would be used to fund the Rs 1,000 crore upstream project bagged by ONGC Videsh in Vietnam, sources said. Of the total project investment, ONGC Videsh is planning to take Rs 400 crore as equity from ONGC's internal resources, Rs 350 crore from the overseas market with the rest possibly being funded by a strategic partner, they said.

With regard to tapping money from international market, ONGC Videsh is planning to take the external commercial borrowings route and is talking to various global bankers like ABN Amro,Citibank, ANZ Grindlays and Bank of America, the sources said.

The amount raised through the ECB route would be based on the parent company's guarantees, they said. The Vietnam project is the single largest offshore project of ONGC Videsh and the subsidiary company has already signed a memorandum of understanding with Petro Vietnam and foreign contractors, BP and Statoil.

Total project cost of the upstream venture is estimated to be Rs 2,000 crore in which it holds a 55 per cent stake (Rs 1,000 crore) with the rest being with BP-Statoil. The project is estimated to be completed by 2002 and will produce about three billion cubic meters of gas per day resulting in the generation of 12 billion kwh of electricity every year to meet 60 per cent of Vietnam's requirement.

Apart from the upstream venture, the project also includes setting up of a pipeline and a power project. The total cost of all the three projects is worth $1.6 billion, the sources said. The subsidiary company will have stake only in theupstream project, but not in the other two projects, they said.

ONGC Videsh has also signed an MoU with government of Vietnam and the contractors for providing guarantees necessary for foreign investors which include billing and payments, foreign currency rule, language and law of disputes and project implementation.

The subsidiary company is also on the look-out for a strategic partner. Oil majors like Reliance, Mobil, Indian Oil Corporation and Gas Authority of India have evinced interest in it, sources said.