ONGC Videsh might soon buy stake in 2 Siberian oilfields

Might sign initial pact in this regard next week, when Russian President Vladimir Putin visits India

ONGC Videsh Ltd (OVL), foreign arm of government-owned Oil and Natural Gas Corporation (ONGC), is likely to soon acquire stakes in two Russian oilfields, Vankor and Yurubcheno-Tokhomskoye.

It might sign an initial agreement in this regard as early as next week, when Russian President Vladimir Putin visits India.

Russian state-owned oil exploration company Rosneft had, in October, made a formal offer to OVL to sell 10 per cent of its stake in the Vankor cluster in northern Siberia, the largest discovered field in Russia with estimated reserves of 500 million tonnes (mt) of oil and 182 billion cubic metres of gas.

“We have been discussing the aspects with Rosneft. A deal might be signed soon,” a top OVL executive told Business Standard.

Such a deal would strengthen OVL’s presence in Russia. The company holds 20 per cent stake in the Sakhalin-1 oil and gas field in eastern Russia. It had also acquired the Siberian fields of Imperial Energy for $2.1 bn in 2009.

For Russia, the signing of the deal has significance in the wake of sanctions imposed by the American and European Union governments on Moscow, for its role in Ukraine. Russia is currently the world’s largest producer of oil, with an output of a little over 10 mn barrels a day. Rosneft had in September sold a 10 per cent stake in Vankor to China’s CNPC, in a deal worth $1 bn. The Russian company has also proposed joint development of the other field, Yurubcheno-Tokhomskoye, with ONGC Videsh. Also in eastern Siberia, it is expected to reach a production level of five mt a year in 2019.

At end-March this year, OVL had presence in 33 projects across 16 countries. These included 13 producing assets in Russia, Syria, Vietnam, Sudan, Myanmar and Azerbaijan. It has invested a little over $4 bn in the past year and a half on acquisitions.

These includes acquisition of Hess Corporation’s 2.72 per cent interest in the Guneshli Fields of Azerbaijan, an additional 12 per cent stake in a deep-water block in Brazil and a six per cent interest in the Rovuma Area-1 Offshore Block in Mozambique from Videocon in January. It had also acquired a direct 10 per cent stake in the same area from Anadarko in February 2014.