IOC consortium, OVL buy Russian oil fields for $4.2 bn

Tribune News Service & PTI

New Delhi, March 16

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 $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% stake in Tass-Yuriakh oilfield from Russia’s Rosneft for $1.28 billion, top officials said.

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

Simultaneously, OVL, the overseas arm of ONGC, which had in September last year bought 15% in the Vankor for $1.26 billion, signed a MoU envisaging its stake going up in the Siberian oilfield to 26% by paying an additional $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% 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 tonne, currently produces 20,000 barrels of oil per day. The output is slated to rise to 100,000 bpd in two years, officials said, adding that IOC-OIL-Bharat PetroResources will pay another $180 million as its share of future capex.

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

The Russian firm will hold the remaining 50.1% in Vankor after OVL and the IOC-led consortium complete buying the total of 49.9%. Vankor has recoverable reserves of 2.5 billion barrels.

While the 15% stake guaranteed OVL 3.3 million tonne of oil a year, India as a whole will get access to about 12 million tonne once 49.9% stake buy is completed.

Vanko is Russia’s second largest field by production and accounts for around 4% of the country’s output. It produces oil at a peak level of about 440,000 barrels a day. — PTI