India’s Oil and Natural Gas Corporation (ONGC) has received government approval for an additional investment of Rs183.65bn ($2.19bn) into ONGC Petro additions Limited (OPaL).
The investment will boost ONGC’s stake in the petrochemical company, thereby strengthening OPaL’s financial stability and operational efficiency.
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The approved funds will be allocated as additional equity capital of up to Rs105.01bn, conversion of Compulsorily Convertible Debentures amounting to Rs77.78bn, and a balance payment of Rs0.86bn for share warrants.
This move will raise ONGC’s stake in OPaL from 49.36% to 95.69%, according to an exchange filing by ONGC.
OPaL, located in Dahej, Gujarat, operates a petrochemical complex and is claimed to have the largest standalone dual-feed cracker in Southeast Asia.
Since its commissioning in 2017, OPaL has established a strong position in India’s polymer market, with a 12% share, producing 1.5 million tonnes per annum (mtpa) of polymers and 0.5mtpa of chemicals.
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By GlobalDataThe government’s approval to increase ONGC’s equity in OPaL is anticipated to improve OPaL’s capital structure and achieve a more balanced debt-to-equity ratio.
With this capital infusion, ONGC’s total investment in OPaL will reach Rs227.28bn.
ONGC said that the government’s approval ensures a continuous supply of gaseous feed to OPaL from ONGC’s new gas fields, at a premium of up to 20% over the administered price mechanism gas price.
This arrangement is anticipated to guarantee OPaL’s consistent performance and aligns with ONGC’s strategic objective of becoming an integrated global energy major.
In a separate development, ONGC Videsh, the international arm of ONGC, recently expanded its portfolio by signing a sale purchase agreement with Equinor.
The agreement involves acquiring a 0.615% participating interest in the Azeri Chirag Gunashli (ACG) oilfield and a 0.737% stake in the Baku Tbilisi Ceyhan (BTC) pipeline, both located offshore Azerbaijan.
This enhances ONGC Videsh’s existing stakes in the ACG field and BTC pipeline, furthering ONGC’s global reach.
