State-owned Indian Oil Corporation (IOC), Oil India (OIL) and Bharat PetroResources (BPRL) are set to sign ‘final acquisition agreements’ with Russia’s Rosneft later this month for stakes worth $3-3.5 billion in two separate oil and gas fields in Siberia, reports Siddhartha P Saikia in New Delhi.
Petroleum minister Dharmendra Pradhan, along with top exec-utives of these firms, are planning to visit Moscow in the last week of June to ink final agreements, sources told FE. New Delhi’s interest in increasing economic cooperation with Kremlin was reflected in several rounds of talks between Prime Minister Narendra Modi and Russian Pres-ident Vladimir Putin.
An official working on the agreements said the first deal where IOC, OIL and BPRL are picking up 29.9% in Rosneft-operated Taas-Yuryakh oil and gas fields in East Siberia has been finalised.
The last minute documentations are underway for acquisition of 23.9% stake in Vankorneft (that runs the Vankor oil field in East Siberia). These acquisitions would cost Indian firms $3-3.5 billion. Of this, IOC would shell out $1.2 billion and its board has given the go-ahead for the acquisitions.
“The final amount would be paid in September. The deals would require approval of the Cabinet Committee on Economic Affairs, which would be the last leg of nod from Indian side,” said the official.
Rosneft’s chief executive Igor Sechin visited New Delhi in March to sign the preliminary heads of agreement for these acquisitions with Indian companies. Rosneft, impeded by US and European financing bans over the conflict in Ukraine, is eyeing investments from Asia to fund expansion. India, the third biggest oil importer, is seeking to enhance energy security amid low oil prices by tying up new sources of crude oil.
ONGC Videsh (OVL), which had bought a 15% stake in Vankorneft for $1.25 billion in September 2015, signed a new MoU to acquire another 11% in the same asset. It is not immediately known if OVL would also seal the final deal during Pradhan’s visit to Moscow. If all these deals materialise, the transaction between Indian companies and Rosenft would be to the tune of $5.5 billion, including OVL’s previous acquisition of 15% in Vankorneft.
State-controlled Rosneft is the world’s top listed oil producer by output. Currently, the Taas-Yuryakh asset is producing 20,000 barrels of oil per day (bopd) with expected peak production of 100,000 bopd by 2021. The Vankor oil field in East Siberia produces more than 4,42,000 barrels of oil per day, double the output of Barmer, India’s largest onshore field, which is operated by Cairn India.
Rothschild is the financial adviser to the Indian consortium, which is also being advised by CGG on technical aspects. Latham & Watkins is the legal adviser and E&Y has been operating as accounting and tax adviser.
On June 19 last year, Rosneft and BP had signed final bidding agreements for a joint venture for the Taas-Yuryakh project, where the Russian explorer would sell 20% stake to the UK firm for $700 million.