In quest of safeguarding India’s energy security through overseas acquisitions, ONGC Videsh Ltd (OVL) and a consortium led by Indian Oil Corp have signed pacts to buy stake in two Russian oil fields for an estimated $4.2 billion. IOC, BPCL and Oil India signed a sale purchase agreement (SPA) for 29.9 per cent stake in Tass-Yuriakh oilfield from Russia’s Rosneft for $1.28 billion. The consortium also signed agreement with Rosneft for acquiring 23.9 per cent stake in Vankor oilfield for $2 billion.
OVL, the overseas arm of state-owned Oil and Natural Gas Corp (ONGC), which had bought 15 per cent in the Vankor for $1.26 billion in September 2015, signed a pact, which would increase its stake in the Siberian oilfield to 26 per cent. OVL needs to pay an additional $925 million.
The IOC-led consortium also signed a pact with Rosneft for acquiring stakes in development of Vankor cluster fields of Suzunskoye, Tagulskoye and Lodochnoye. Indian and Russian firms signed the agreements on the second day of Rosneft CEO Igor Sechin’s two-day visit to India. Speaking over the agreements, Mr Sechin said: “The pacts allow Indian partners to participate in Rusian upstream sector, whilst opening the growing India market to Rosneft”.
India’s energy security
India seeks to bolster its energy security and has enhanced its cooperation with Russia in this area. The IOC-OIL-Bharat Petro Resources deal for 29.9 per cent stake in Tass-Yuriakh oilfield has been concluded. However, the consortium’s Vankor deal is an initial pact and a sale purchase agreement is yet to be concluded. The deal on OVL’s increase in stake in Vankor is yet to be concluded as well.
The Taas-Yuriah oilfield, which holds recoverable reserves of 137 million tons, currently produces 20,000 barrels of oil per day. The output is expected to rise to 100,000 bpd in two years. It is also expected that IOC-OIL-Bharat Petro Resources will pay another $180 million as its share of future capex.
In 2015, Rosneft had sold 20 per cent stake in Taas-Yuriah to UK based energy giant BP for $750 million. Rosneft will hold 50.1 per cent stake in the project after the deal with Indian firms.
The Russian firm will hold the 50.1 per cent in Vankor after OVL and the IOC-led consortium finalised deal to acquire 49.9 per cent stake. Buying 15 per cent stake in Vankor was the fourth biggest acquisition by OVL.
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