Oil India likely to exit US, Russia blocks; to stay in Venezuela

In a major shift in its overseas strategy, state-run Oil India (OIL) is planning to exit from two major blocks in the US and Russia. This, despite India’s second-largest exploration major reaffirming its commitments to the crisis-hit Venezuela.

The company is in talks with multiple players to sell its assets Niobrara Shale Asset in the US and Licence 61 asset in Russia. This was after the assets did not turn out to be lucrative, compared to the company’s overall overseas business plans. Oil India Chairman and Managing Director Utpal Bora confirmed the development to Business Standard. 

“Our US shale asset is in northern part, where Indian Oil (IOC) is also a partner. Whoever, gives us a right price, we will sell it to them. Another asset we are planning to exit is Licence 61 in Russia,” said another official close to the development. This will mark the exit of the company from its exploration plans in the US. 

It was in October 2012 that Oil India and IOC jointly acquired 30 per cent stakes in Carrizo Oil and Gas’s shale assets in the Denver-Julesburg Basin in Colorado for $82.5 million. At present, Carrizo holds 60 per cent stake in the block, while Oil India has 20 per cent, IOC has 10 per cent, and Chinese company Haimo Oil & Gas owns the remaining 10 per cent. According to the information provided in Oil India’s website, current production from the acreage to net to Oil India is approximately 1,000 barrels of oil equivalent per day (boepd). 

On the other hand, it was through the acquisition of 50 per cent stake in Licence 61 from Ireland-based PetroNeft Resources in 2014 for $85 million that Oil India marked its foray into the Russian market. The current production share net to Oil India from the block is 1,050 boepd. In October 2016, a consortium of Indian companies including Oil India had gone for two major acquisitions in Russia through grabbing stakes in Vankorneft and Taas-Yuryakh blocks. “Russia’s Vankor we have already started receiving dividends. Hopefully, it will be cash positive in another six years. Taas-Yurakh, they are going to pay the first dividend very soon,” Bora said.

Bora said Oil India has no plans to exit from Venezuela, though the country is facing turmoil. “We have evacuated our personnel from the country for the time being. We will not exit Venezuela. They are saying things will improve. We are on a wait-and-watch mode,” Bora said. 

For the past four months, the Latin American nation is going through a chaotic political stand-off between Venezuelan President Nicolás Maduro's regime and Opposition leader Juan Guaidó's supporters.  

ONGC Videsh, a fully-owned subsidiary of state-run Oil and Natural Gas Corporation, that owns 40 per cent stake in the crisis-hit country’s San Cristobal field has also temporarily evacuated its staff.