OVL, IOC consortium to buy Russian oil fields for $4.2 billion

New Delhi: ONGC Videsh Ltd (OVL) and a consortium led by Indian Oil Corp today signed agreements to buy stake in two Russian oilfields in Siberia for an estimated USD 4.2 billion (over Rs 28,253 crore).

IOC, Oil India Ltd and a unit of Bharat Petroleum Corp Ltd (BPCL) signed sale purchase agreement (SPA) for 29.9 percent stake in Tass-Yuriakh oilfield from Russia's Rosneft for USD 1.28 billion, top officials said.

The consortium also signed Heads of Agreement (HoA) with Rosneft for taking 23.9 percent stake in Vankor oilfield for just over USD 2 billion.

Simultaneously, OVL, the overseas arm of state-owned Oil and Natural Gas Corp (ONGC), which had in September last year bought 15 percent in the Vankor for USD 1.26 billion, signed a MoU envisaging its stake going up in the Siberian oilfield to 26 per cent by paying an additional USD 925 million.

The IOC-led consortium also signed another MoU with Rosneft for exploring taking stake in development of Vankor cluster fields of Suzunskoye, Tagulskoye and Lodochnoye.

The agreements were signed on the second day of Rosneft CEO Igor Sechin's two-day visit to India.

Speaking to reporters after the signing of the agreement, he said the pacts "allow India partners to participate in Rusian upstream sector, whilst opening the growing India market to Rosneft".

While the IOC-OIL-Bharat PetroResources deal for 29.9 percent stake in Tass-Yuriakh oilfield is a concluded agreement, the consortium's Vankor deal is an initial pact and a sale purchase agreement is yet to be concluded. Similarly, OVL's increase in stake in Vankor too is yet to be concluded.

Taas-Yuriah oilfield, which holds recoverable reserves of 137 million tons, currently produces 20,000 barrels of oil per day. The output is slated to rise to 100,000 bpd in two year, officials said, adding that IOC-OIL-Bharat PetroResources will pay another USD 180 million as its share of future capex.

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

The Russian firm will hold the remaining 50.1 percent in Vankor after OVL and the IOC-led consortium complete buying the total of 49.9 percent.

Vankor has recoverable reserves of 2.5 billion barrels. While the 15 percent stake guaranteed OVL 3.3 million tonnes of oil a year, India as a whole will get access to about 12 million tonnes once 49.9 percent stake buy is completed.