Kashagan deal: ‘Premature to talk whether partners would exercise pre-emption rights’

ONGC Videsh Limited Managing Director DK Sarraf talked to The Indian Express a day after announcing the plan to acquire US energy company ConocoPhillips' 8.4 per cent stake in Kazakhstan's Kashagan oilfield. Excerpts.

Media reports say that the current partners in the Kashagan field have a 60 day window to exercise a possible pre-emption rights to prevent ONGC Videsh Limited from stepping in. How do you react to this news?

We have yet to formally apply for entering into the deal. So, I cannot say whether the partners will exercise their option as it is a bit premature. But we will examine it if the contingency emerges.

How do you plan to finance the projected $5 billion deal?

Some of it will come from ONGC's cash reserves. The rest we will raise from the markets. The ratio of the two, I cannot say at the moment, because we have not thought about it as of now. But we will raise the finance when required.

How do you plan to utilise the crude from the Kashagan fields?

The options are to either bring it back or sell it in the spot markets. There is a central asian pipeline (planned) and some other pipelines are coming up that we can exploit. So the oil could come back to India. The acquisition would add over 1 million tonnes to our annual production.

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