ONGC Videsh Limited on Friday announced buying 15% stake in Vankorneft, which owns the prolific Vankor field in East Siberia. Russia’s biggest crude producer Rosneft holds the remaining stake. Vankor is Russia’s second largest field by production and accounts for 4% of country’s production. ONGC Videsh, the overseas subsidiary of state-run ONGC, has struck the strategic deal by buying equity in the producing asset, which is at its peak. This comes at a time when India’s is aggressively looking to cut down oil imports. Prime Minister Narendra Modi wants India’s crude oil imports, which stood at 189.43 million tonnes worth $112.74 billion in FY15, to be reduced by 10% by 2022 and make it half by 2030. Narendra K Verma, managing director of ONGC Videsh speaks over telephone from Russia after signing the deal with Siddhartha P Saikia. Edited excerpts:
When would crude oil start flowing to India from the Vankor field?
This would depend on both the partners on how swiftly we can get the government and regulatory approvals. We are expecting that crude oil from Vankor field should start flowing here by mid-2016.
You have not disclosed the value of the deal. Would you like to give some indication?
I cannot reveal the value of the deal. This is confidential.
Igor Sechin, chief executive officer of Rosneft, has been quoted saying the deal sets ‘a market price’ for the asset. What is the average crude oil price you have considered while making the deal?
We should understand that these are long-term deals. Currently, crude oil prices are low. While negotiating the deal, we have taken into consideration both current and long-term price of the commodity. We have factored in the long-term projections for crude oil price.
How do you plan to fund the deal – internal accruals or you would raise funds from market?
We would look into the funding of the deal. We have a strong parent ONGC, from whom we take loans. We have both the options and we would decide on the funding in due course.
OVL was in talks with Rosneft to pick up stakes in two blocks in East Siberia. Is OVL negotiating buying into Yurubcheno-Tokhomskoye oilfields?
With the buying of equity stake in Vankor field, we have laid the foundation stone. We do not rule out an expansion of OVL business. Currently, we are engaged with this deal.
What is the current production from Vankor fields? How much would be OVL share?
Currently, the production is hovering around 4,42,000 barrels per day. OVL share would be 66,000 barrels per day.
How much is the production likely to go upto?
Currently, the asset is seeing the peak production.
OVL has taxation issues with Russian authorities. How sooner do you expect them to be sorted?
I would not like to comment on those issues at this moment.