ONGC Videsh, the overseas arm of state-run ONGC, on Friday announced a plan to pick up a 15% stake in Vankorneft that runs the Vankor oilfield in East Siberia from Russia’s Rosneft for a reported $1.25 billion.
ONGC Videsh, the overseas arm of state-run ONGC, on Friday announced a plan to pick up a 15% stake in Vankorneft that runs the Vankor oilfield in East Siberia from Russia’s Rosneft for a reported $1.25 billion. The field, which has been under production since August 2009, produces over 4,42,000 barrels of oil per day, double the output at Barmer, India’s largest onshore field operated by Cairn India.
With the deal, OVL’s share would be around 66,000 barrels per day.
The deal assumes significance to India as it will bolster the asset base of OVL and the energy-starved country would immediately start getting its share of crude oil to meet the increasing demand at home. Moreover, the acquisition has taken place when global crude oil price has plummet to a six-year low. The deal is learnt to have been discussed and more or less reached between Prime Minister Narendra Modi and Russian President Vladimir Putin at Ufa in early July.
Though neither party disclosed the deal size, Igor Sechin, chief executive officer of Rosneft, was quoted as saying by Bloomberg that the “deal sets a market price for the asset”.
Vankor is Rosneft’s (and Russia’s) second largest field by production and accounts for 4% of Russian production. In December 2014, FE reported that OVL is looking at picking up stake in the Vankor fields that are producing crude oil.
OVL’s parent ONGC share on the BSE closed 1.68% down at Rs 225.60, while the benchmark Sensex closed 2.18% down.
The initial recoverable reserves of the Vankor field as on January 1, 2015, were estimated at 476 million tonnes of oil and condensate and 173 billion cubic metres of gas. The field’s acreage is 447 sq km.
OVL was earlier in talks with Rosneft to pick up stakes in two blocks in East Siberia in two separate deals — Vankor and Yurubcheno-Takhomskoye. OVL is also in talks with Rosneft for a 49% equity in its greenfield project, Yurubcheno-Takhomskoye, a discovered asset. The Yurubcheno-Takhomskoye project has the potential to produce 1 billion barrels per annum after three years.
In July, Rosneft came under US sanctions imposed on Russia for its actions in Ukraine. The firm has sought financial support to the tune of $40 billion to offset sanction-hit measures. According to an industry watcher, Rosneft is trying to sell stakes in its prolific assets to mop up funds.