The deal will come at a cost of USD 2.64 billion in cash and will enhance ONGC's reserves by giving access to 5 trillion cubic feet (tcf) reserves, adds Sarraf.
"We know that the market may not be that helpful as they were a couple of months back, but we are sure that we would comfortably fund this amount from the forex market at a reasonable rate of interest," adds Sarraf.
Below is the edited transcript of Sarraf's interview to CNBC-TV18.
Q: It is a 2.6 billion payment that you are making for this 10 percent stake?
A: This is 2.64 billion.
Q: What do you expect in terms of returns and by when from this investment?
A: This block has got 65 trillion cubic feet (tcf) of gas and we have acquired 10 percent of that. This 65 tcf is based on what we called P10, if we say P50 reserves which are the main reserves having better probability, the we should get 50 tcf. We would be getting 5 tcf of reserves which would be little less than 5 million tonne of LNG which would amount to about 30 years.
Q: Do you get this floor right away or is it more a trading gain that you will make, are you expecting this flow starting like immediately?
A: This is just a discovered block and production would take couple of years to start and we expect that the production would start in 2018.
Q: How will you be funding this particular deal?
A: ONGC is a cash rich company, does not have significant amount of debt in its balance sheet. We have the borrowing capacity on our balance sheet. So, we know that the market may not be that helpful as they were a couple of months back, but we are sure that we would comfortably fund this amount from the forex market at a reasonable rate of interest.
Q: How much of your own cash will you use and how much will you borrow?
A: These are all strategic methods. We would deliberate between ONGC and OVL etc and then we would arrive at some decision, but as of now we would not use our internal cash for this deal and the entire amount we would like to raise from the overseas market.
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