ONGC’s $1.3-bn deal for stake in Rosneft’s subsidiary gets Russian govt nod

26 Mar 2016


The Russian government has approved Indian oil and gas producer ONGC's $1.3 billion deal to acquire a 15 per cent stake in the Vankor oilfield from Rosneft, the head of Russia's Anti-Monopoly Service, Igor Artemyev, said.

"The Indian party will pay about $1.3 billion for Vankorneft shares in this transaction," Artemyev said.

ONGC Videsh, the overseas investment arm of ONGC, had signed an MoU with Rosneft to raise its stake in the Vankor cluster in Siberia to 26 per cent from the existing 15 per cent.

"Furthermore, we know Rosneft management signed a preliminary agreement with the Indian side on sale of an additional stake in Vankorneft and in respect of certain other fields," the official added.

Besides, Indian Oil Corp, Oil India and Bharat PetroResources had also signed another agreement with Rosneft to pick up 23.9 per cent stake in the same Vankor field.

Together with OVL, this would raise the overall stake of Indian companies in the oil field to 49.9 per cent.

"The commission supported this deal and it will be implemented shortly, considering that the Government of India also backed it up some time ago," Artemyev said.

Vankor, launched in 2009, produces around 440,000 barrels per day. The field is a source of Russian oil supply to China.

Vankorskoe field (developed by Vankorneft) has reserves about 500 million tonnes of oil and 182 billion cubic meters of gas. "Speaking at large, if funds from certain other countries well known to you were coming earlier (the Chinese side investments billions of dollars into the Yamal LNG) India is the case in point now," the official added.

Speaking at the meeting of the commission on monitoring foreign investment, Russian Prime Minister Dmitry Medvedev said the government would consider the bid of India's ONGC for participating in the development of the Vankor field.

"Today we're considering the application of ONGC, India's second-biggest oil and gas company, to acquire shares of the Russian joint-stock company Vankorneft, which is involved in production of crude oil and associated gas," Medvedev said.

"In case a decision is made after the commission's meeting the Indian companies will expand presence in our economy as the oil asset portfolio of ONGC and Vankorneft will increase in the area of prospecting and production of hydrocarbons," he added.

In September 2015, Rosneft inked an agreement with Indian state-owned company ONGC on sale of a 15 per cent stake in Vankor for USD 1.27 bln. The deal, which has not been finalized yet, stipulates two seats in Vankorneft board of directors for ONGC, with Rosneft keeping control over the Vankor cluster infrastructure.

On 16 March, Rosneft signed a memorandum of understanding with ONGC Videsh Limited for cooperation in respect of the Vankor project, which stipulates the prospective increase to 26 per cent of the share of the Indian company in Vankroneft.

The document also oversees the analysis of the joint trading development's potential, including the possibility of entering into long-term crude-oil supply contracts.

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