India’s public-sector hydrocarbon companies, namely ONGC Videsh (OVL), Indian Oil (IOC), Oil India (OIL) and Bharat PetroResources (BPRL), are unlikely to sign a heads of agreement to acquire up to 49.9% stake in Rosneft’s Vankor cluster asset in east Siberia during the BRICS summit in Goa this week.
A top official of one of the Indian firms told FE that signing of the deal would be delayed as they are yet to analyse two out of three fields in the Vankor cluster — Suzunskoye, Tagulskoye and Lodochnoye. At the same time, Oil India may opt out of the consortium. Earlier, the parties were targeting to sign a heads of agreement at the BRICS summit, where Russian President Vladimir Putin would also join. New Delhi’s interest in increasing economic cooperation with Kremlin was reflected in several rounds of talks between Prime Minister Narendra Modi and Putin.
Indian public-sector companies had struck deals to buy equity stakes worth about $5.3 billion with Rosneft since September 2015. OVL has picked up 26% stake in Vankor field in two transactions, while a consortium of OIL-IOC-BRPL acquired another 23.9% in the same asset, taking the total stake of Indian firms in the prolific asset to to 49.9%. In a separate transaction, the IOC-OIL-BPRL combine picked up 29.9% in Taas-Yuryakh project.
The official said the imminent deal for the Vankor cluster asset would also for a 49.9% stake as in the case of the Vankor asset. But if Oil India opts out, the stakes would have to be reworked between the firms.
The reserves and value of the deal are not known. Industry watchers say that a near-50% deal would be worth more than a couple of billion dollars.
Wood Mackenzie, a global energy research and consultancy group, suggested a fair value of $5.9 billion for a 49.9% stake in Vankor and $1.4 billion for a 29% stake in Taas-Yuryakh. This means the deals concluded by India firms were at a 30% discount to Wood Mackenzie valuations.
The Vankor cluster, also known as satellite field, has “huge-potential”, said another official, adding that the Vankor cluster comprises both producing and under-development fields.