India Approves OIL, IOCL, BRPL Russia Deal

India’s Cabinet Committee on Economic Affairs, chaired by the prime minister Narendra Modi, on September 28 gave its approval to Indian state energy firms’ stake buy in Russian energy assets.

Earlier this year, an Indian consortium of Oil India Limited (OIL), Indian Oil Corporation Limited (IOCL) and Bharat Petro Resources Limited (BPRL) bought 23.9% stake in Vankorneft and 29.9% stake in Taas-Yuryakh from Rosneft, which operates Vankor and Tass-Yuryakh fields and are its wholly owned subsidiaries. 

The acquisition of stake in Vankorneft will provide 6.56mn mt of oil equivalent and 29.9% stake in Taas-Yuryakh will provide 0.5mn mt of oil equivalent initially and 1.5mn mt of oil equivalent by 2019, the Indian government said in a statement. “The acquisition is in line with India’s stated objective of adding high quality international assets to its exploration & production portfolio and thereby augmenting India's energy security,” the statement added.

The consortium will be paying $2.02bn to acquire the stake in Vankorneft and $1.24bn for the stake in Taas-Yuryakh. Earlier in May, ONGC Videsh (OVL) completed the formalities of acquiring 15% stake in Vankorneft at the cost of $1.28bn. Earlier this month, OVL signed an agreement with Rosneft to buy an additional 11% stake in Vankorneft. Indian state energy firms now own 49.9% stake in Vankorneft. 

With US and EU sanctions in place, Moscow is looking to expand energy exports in fast growing Asian economies such as China and India, but also with Indonesia. Rosneft and Indonesian state Pertamina agreed in May 2016 a cooperation deal that may lead to a Russian investment in a refinery in eastern Java and to Pertamina becoming an equity holder in some of Rosneft's upstream interests in Russia.

Shardul Sharma