The cabinet committee on economic affairs (CCEA) on Saturday cleared that ONGC-VL would acquire a 20 per cent interest from Rosnet, the Russian national oil company, in the Sakhalin-I offshore projectin Russia. It will cost India about Rs 7,500 crore ($1.7 billion), petroleum & natural gas minister Ram Naik told mediapersons after the CCEA meeting.

As per the arrangement, ONGC-VL will bear 20 per cent of the cost and get 20 per cent of the oil and gas production. Oil production would start in 2005, and gas production in 2006, he said.

The investment proposal will help in acquiring equity oil from abroad of about 2-4 million metric ton and 5-8 million cubic metre gas per day, Mr Naik said.

The exploration work carried out earlier in Sakhalin-I has resulted in identification of three major oil and gas bearing structures, Arkutun-Dagi, Chayvo and Odoptu, he said.

The Indian investment proposal would require approval from the government of Russia and waiver of pre-emptive rights by other partners in the project, the minister said.

Mr Naik and finance minister Yashwant Sinha would go to Russia to sign the agreement on January 15.