ONGC Videsh eyes stake in Sakhalin-3

Mangalore, Dec 2 | Updated: Dec 3 2006, 06:13am hrs
India will invest $5 bn in various projects to source one billion barrels of oil and oil-equivalent gas from Russia to diversify its energy sources. This was announced by ONGC Videsh Ltd (OVL) MD R S Butola at a function organised here to receive the first oil from the Russias Sakhalin -1 project. The first shipment from the oil and gas field was received by petroleum minister Murli Deora on Saturday at the New Mangalore Port Trust complex here.

The consignment of 92,055 metric tonnes (672,000 barrels) of Sokol crude was ferried on board the Russian ship MK Viktortitov the oil tanker of Primorsk Shipping Company on a charter of ONGC Videsh Ltd. The tanker set sail from Dekastri port in Russia Nov 14. The company will ship second cargo by the month-end. OVL has 20% stake in Sakhalin-1, acquired from two subsidiaries of Russian government oil firm Rosnett SMNG-S and Rosneft-S.

OVL is now eyeing a stake in the prestigious Sakhalin-3 field in Russia. However, official sources disclosed that as against the earlier practice of securing oil and gas properties in Russia through the negotiations route, OVL will have to go through the bidding route to secure oil and gas properties in Russia.

Officials confirmed that getting a slice of equity in Russian oil and gas properties through the negotiations route seems a tricky situation now. As a result, OVL has already initiated discussions with Russian oil and gas majors-Rosneft and Gazprom for putting in a joint bid for acquiring a stake in Sakhalin-3 project.

The total recoverable oil and gas reserves from Skhalin-1 are 2.3 billion barrels of oil and 17 tcf of gas. The total investment commitment by the consortia partners of Sakhalin-1 project stands at a whopping $12.8 billion by 2013. Of this, OVLs share stand at 20%.

OVL was the first company to commit an investment as high as $1.7 billion in Russia's Sakhalin-1 in 2001 for a 20% stake in the project. This investment went up to $2.7 billion and included a $1.2 billion loan to Russian energy major-Rosneft.

OVL made all possible efforts to secure equity in Russian oil and gas properties in lieu of this loan component but there was little response from the Russian side on this proposal of OVL. Rosneft has in August this year returned this $1.2 billion loan to OVL, officials said.

Stating that Sakhalin to Mangalore, a new silk route of more than 5,700 nautical miles, is the new route of integration, Deora said India plans to get more oil and gas from Russia as part of its efforts to diversify sources of energy. ExxonMobil holds 30% in Sakhalin-I, with the remaining equity owned by Russia's Rosneft (20%) and Japan's Sakhalin Oil and Gas Development Co (30%).