Fix Sistema first, talk OVL later, firm Russia tells India
In 2009, OVL had acquired Imperial Energy for $2.1 billion. However, with the production from the field, situation in difficult terrain of West Siberia, being much below expectations, the investment is somewhat stressed. New Delhi wants a 10-year tax holiday on export duty on Imperial Energy since 2009 and a total waiver of mineral extraction tax to salvage OVL's investments.
Even as OVL's investments in Sudan and Syria has been impacted by adverse geo-political conditions, it has recently clinched an allegedly overpriced $5 billion deal for for 8.4% stake in assets in North Caspian Sea.
As per Russia's rules, OVL is supposed to pay a 35% mineral exploration tax plus a corporate tax of 50%. With production from Imperial Energy remaining low, this is hurting the company. “Current production from Imperial Energy stands at 12,000-15,000 barrels per day, which is much below the projected 45,000 barrels. The Russian government has rejected the OVL proposal for tax rebate since the Indian government has imposed some sort of issues on its telecom venture Seistema,” said Ashutosh Bharadwaj, senior research analyst, Nirmal Bang Institutional equities.
Meanwhile, at the end of the day-long summit meeting, the two sides agreed to intensify efforts to enhance mutual investments in exploration and