ONGC Videsh gets govt nod to up stake in Russian oil field for $930 mn

New Delhi: ONGC Videsh Ltd (OVL) Wednesday got government nod to raise its stake in Russia's second biggest oil field of Vankor by 11 percent at an investment of USD 930 million.

OVL, which had previously bought 15 percent stake in Vankor from Russian national oil firm Rosneft for USD 1.268 billion, will get additional 3.2 million tons of oil equivalent on top of 4.11 million tons secured earlier.

Besides OVL's 26 percent, a consortium of comprising Oil India (OIL), Indian Oil Corporation (IOC) and Bharat PetroResources (BPRL) acquired 23.9 percent stake in the field at a cost of USD 2.02 billion, giving them 6.56 million tons of oil.

Parallely, OIL-led consortium today completed the deal paying USD 2.02 billion to Rosneft.

"Indian companies have now invested USD 4.2 billion in Vankor. Together with 29.9 percent stake OIL-IOC-BPRL consortium bought in Taas-Yuryakh oilfield in East Siberia for USD 1.12 billion, the total investment in Russia this year is USD 5.46 billion. This investment will give India 15.18 million tons of oil equivalent," Oil Minister Dharmendra Pradhan said.

The investment made compares to USD 28.48 billion investment by Indian companies overseas in the past 50 years, giving it about 10 million tons of oil equivalent, he said.

OVL had in May closed a deal to acquire 15 percent stake in JSC Vankorneft -- a company organised under the law of Russian Federation, which is the owner of Vankor Field and North Vankor licence.

Rosneft, the national oil company of Russia continues to hold the remaining 50.1 percent shares of JSC Vankorneft, the developer of the Vankor oil and gas condensate field in Turukhansky district of Krasnoyak Territory in Russia.

The field has recoverable reserves of 2.5 billion barrels.

Vankor is Rosneft's (and Russia's) second largest field by production and accounts for 4 percent of Russian crude oil production. The daily peak production from the field is around 442,000 barrels of oil per day.

The USD 2.2 billion OVL spent for acquiring 26 percent stake in Vankor will be its third biggest acquisition. It had in 2013 paid USD 4.125 billion for a 16 percent 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 percent interest in the Sakhalin-1 oil and gas field off Russia's far eastern coast.

"The Cabinet Committee on Economic Affairs, chaired by Prime Minister Narendra Modi, has given its approval to an acquisition by OVL for 11 percent stake in JSC Vankorneft from Rosneft Oil Company (Rosneft)," an official statement said here today.

The acquisition of stake in Vankorneft will provide 3.2 million tonnes of oil equivalent to OVL by 2017. OVL's previous 15 percent stake buy in Vankor had given it 4.11 million tons per annum of oil.

"The acquisition is in line with the ONGC's stated objective of adding high quality international assets to India's exploration and production (E&P) portfolio and thereby augmenting India's energy security," the statement said.

Taas currently produces about 21,000 barrels per day of oil, and a peak of 1,00,000 bpd is expected by 2021. Vankor, on the other hand, is past its peak, which was 161 million barrels (22 million tonnes) in 2014 and 2015. It currently produces 154 million barrels.

Rosneft had last year sold 20 percent stake in Taas to BP of UK for USD 750 million. The Russian firm will hold 50.1 percent stake in the project after the deal.