Indian Oil Corp eyes 5-10% stake in Russia's Vankor oilfield

New Delhi: Hot on the heels of OVL's USD 1.27 billion deal to buy stake in Vankor oilfield of Russia, state- owned Indian Oil Corp (IOC) has expressed interest in taking 5-10 per cent stake in the Rosneft-operated field.

ONGC Videsh Ltd, the overseas arm of state-owned Oil and Natural Gas Corp (ONGC), had on September 4 agreed to buy 15 per cent stake in Russia's second biggest oil field of Vankor from Rosneft for USD 1.268 billion.

While the OVL deal is yet to be closed, IOC has expressed its interest in take in stake in Vankor field, sources with direct knowledge of the development said.

Besides IOC, Oil India Ltd (OIL) and Bharat Petroleum Corp Ltd (BPCL) too are interested in picking a stake in Vankor, they said.

IOC has dashed off a letter to Rosneft with an offer to buy 5-10 per cent stake in Vankor on same terms as of the OVL deal.

Sources said that originally OVL was negotiating to buy 25 per cent stake in Vankorneft, the developer of the Vankor oil and gas condensate field in Turukhansky district of Krasnoyak Territory in Russia.

But Rosneft was willing to give no more than 10 per cent. A 10 per cent stake would not have given OVL a position on board of Vankorneft and so the Indian firm pressed hard and got a higher 15 per cent interest with right to nominate two board member.

The field, which has recoverable reserves of 2.5 billion barrels, will give OVL 3.3 million tonnes per annum of oil production.

Rosneft, Russia's national oil company, holds 100 percent stake in Vankorneft. Acquisition by OVL is subject to relevant board, government and regulatory approvals and is expected to be completed by 2016-mid, they said.

This will be the fourth biggest acquisition by OVL. It had in 2013 paid USD 4.125 billion for a 16 per cent stake in Mozambique's offshore Rovuma Area 1, which holds as much as 75 Trillion cubic feet of gas reserves.

In 2009, it had bought Russia-focused Imperial Energy for USD 2.1 billion. Prior to that, it had in 2001 paid USD 1.7 billion for a 20 per cent interest in the Sakhalin-1 oil and gas field off Russia's far eastern coast.

Vankor is Rosneft's (and Russia's) second largest field by production and accounts for 4 per cent of Russian production. It produces around 442,000 barrels per day of crude oil.

Sources said Vankor is of particular interest to IOC and others as it is a producing field and the acquisition will give a share of oil output from day one. This is in contrast to an exploration block where it takes years to bring it to production.

Rosneft, whose stake in the project will come down to 85 per cent, will continue to keep full control of the general infrastructure of Vankor cluster, including oil pipeline Vankor-Purpe.