Indian OVL Buys Additional 11% Stake in Russian Vankorneft

ONGC Videsh (OVL), the overseas arm of ONGC, has signed an agreement with Rosneft to buy an additional 11% stake in Vankorneft, which owns the east Siberian Vankor oil and gas field.

No financial details were provided but in May, the Indian state owned energy major closed the deal to acquire 15% stake for $1.27bn. After the closing of the present transaction, OVL’s share in Vankorneft will rise to 26%. The agreement was signed by OVL CEO Narendra K Verma Rosneft boss Igor Sechin in Moscow September 14.

Vankorneft is a 100% subsidiary of Rosneft, and Vankor is the largest oil and gas field discovered in Russia in the past 25 years. There are plans to produce about 500mn mt of oil and about 182bn m³ of gas jointly by the Russian and Indian sides at this field alone. 

As on January 1, 2016 Vankor field 2P reserves by PRMS classification are 265mn mt of oil and condensate and 88bn m³ of gas, according to Rosneft website.

“The acquisition of additional 11 % bears significant strategic importance and would add about 30% to the existing ONGC Videsh’s production at the current rate and approximately 2.2mn mt of oil and 1bn m³ of gas annually,” ONGC said in a statement.

In addition to OVL, Rosneft has signed a separate agreement with a consortium of Indian state owned energy firms to sell stake in Vankorneft. Companies led by Oil India Limited along with Indian Oil Corporation and Bharat PetroResources signed the agreement to buy 23.9% stake in the Rosneft subsidiary at the St Petersburg International Economic Forum earlier this year.

With US and EU sanctions in place, Moscow is looking to expand energy exports in fast growing Asian economies such as China and India.   

Shardul Sharma