OVL ends buyout of Russian field

ONGC Videsh Ltd today announced completion of acquisition of 15 per cent stake in Russia's second biggest oil field of Vankor from Rosneft for $1.268 billion, its fourth biggest acquisition.

The overseas arm of state-owned Oil and Natural Gas Corp (ONGC) said the acquisition of 15 per cent stake in JSC Vankorneft -- a company organised under the law of Russian Federation, which is the owner of Vankor Field and North Vankor licence -- was completed today.

Rosneft, the national oil company of Russia continues to hold the remaining 85 per cent shares of JSC Vankorneft, the developer of the Vankor oil and gas condensate field in Turukhansky district of Krasnoyak Territory in Russia.

The field, which has recoverable reserves of 2.5 billion barrels, will give OVL 3.3 million tonnes per annum of oil production.

OVL said in a statement that the deal to acquire stake in Vankor was signed by its Managing Director & CEO Narendra K Verma and Rosneft head Igor Sechin in early September last year.

Further to that, Rosneft agreed to sell another 11 per cent stake in Vankor to OVL. Details of this deal are yet to be finalised.

"Vankor is Rosneft's (and Russia's) second largest field by production and accounts for 4 per cent of Russian crude oil production. The daily peak production from the field is around 442,000 barrels of oil per day. With 15 per cent shareholding, OVL's share of daily oil production would be about 66,000 bpd," the statement said.

The acquisition strengthens OVL's presence in Russia and is consistent with "stated strategic objective of adding high quality international assets to its existing E&P portfolio," the statement said.

It also has "significant strategic importance to India, both in terms of augmentation of India's energy security as well as adding a new dimension to the relationship between Rosneft and OVL besides further strengthening the cooperation between the two countries," it added.

This will be the fourth biggest acquisition by OVL. It had in 2013 paid $4.125 billion for a 16 per cent stake in Mozambique's offshore Rovuma Area 1, which holds as much as 75 Trillion cubic feet of gas reserves.

In 2009, it had bought Russia-focused Imperial Energy for $2.1 billion. Prior to that, it had in 2001 paid $1.7 billion for a 20 per cent interest in the Sakhalin-1 oil and gas field off Russia's far eastern coast.

OVL will have two seats on the board of Vankorneft.