The global march of Indian companies continues with ONGC Videsh Ltd., the overseas arm of the state-run ONGC, deciding to buy 15 percent stake in Vankorneft, a subsidiary and the second largest oil field of Rosneft in Russia. The signing an agreement with Russia energy giant Rosneft is expected to bring OVL about 3.5 million metric tonnes of oil a year.
The decision to acquire a minority stake in Vankorneft by ONGC was decided during Prime Minister Narendra Modi’s visit to Ufa where he met Russia’s President Vladimir Putin on the sidelines of the twin BRICS and SCO summits. The initial recoverable reserves of the Vankor field are estimated at 476 million tonnes of oil and condensate and 173 billion cubic meters of gas. The daily output is more than 60,000 tonnes.
Russia’s economic fortunes are largely determined by its energy sources. With crude oil prices hovering below the USD 50 mark, Russian oil companies, including giants like Rosneft, have seen their profits erode. According to IMF reports, crude oil reaching USD 105 will help Russia rebalance its budgets. ONGC’s purchase of the East Siberia oil field comes at a time when the Russian economy is weakening and dwindling profits of one of its biggest oil giants has raised serious concerns. For ONGC, the deal comes as a boost to tap into newer markets and meet the growing demand for an energy- hungry India.
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