ONGC Videsh in $1.2 billion deal for 15% stake in Rosneft’s Vankor field

Source: Times of India

NEW DELHI: ONGC Videsh Ltd is to acquire from Russian oil behemoth Rosneft a 15% stake in Vankor oil and gas fieldin eastern Siberia for an estimated $1.2 billion, making it the fourth largest acquisition by the overseas investment arm of India’s flagship explorer ONGC.

Sources said the deal would see ONGC Videsh get two seats on the board of Vankorneft and 3.3 million tonne of oil per annum. Rosneft would create an operator company that would allow more efficient management of both Vankor field and the company’s other licences in this region.

The acquisition received approval of top political leadership of both the countries during the July 8 meeting between PM Narendra Modi and President Vladimir Putin on the sidelines of BRICS and SCO summit at the Russian city of Ufa.

It is a win-win deal for both the countries and underpins the inherent strength of bilateral relations in spite of New Delhi’s markedly visible tilt towards Washington in recent times, including in big-ticket defence deals.

For India, the acquisition is one more step towards ensuring the country’s energy security and expands its presence in the oil and gas industry of one of the largest producers outside Opec. ONGC Videsh already has a 20% stake in Sakhalin-I project and owns Imperial Energy, which operates fields in the Tomsk region of eastern Siberia.

For Russia, the deal makes a statement to the West, which has imposed economic sanctions due to Kremlin’s alleged role in Ukraine and annexation of Crimea. It also brings in investment at a time when the Russian economy is under pressure from low oil prices. It also balances out it oil ties in the face of ever-expanding links with China.

The degree of importance accorded to the deal by Kremlin was evident from Putin’s presence at the signing ceremony at the Eastern Economic Forum in Vladivostok on Friday. Rosneft chairman Igor Sechin, considered close to kremlin, and ONGC Videsh managing director NK Verma signed on the dotted lines.

The Vankor field is located 130km west of Igarka in the Turukhansk district of Krasnoyarsk Krai in eastern Siberia, close to the border with Yamalo-Nenets Autonomous Okrug.

Rosneft, the largest publicly traded oil firm in the world, operates the field through its 100% subsidiary Vankorneft. The field is estimated to hold reserves of 520 million tonne of oil and 95 billion cubic metres of gas. It began production in August 2009.

“Vankor is Rosneft’s (and Russia’s) second largest field by production and accounts for 4% per cent of Russian production. The daily production from the field is around 4,42,000 barrels per day of crude oil on an average with OVL’s share of daily oil production at about 66,000,” ONGC Videsh said in a statement.

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