Rosneft, India's OVL Close Vankorneft Deal

Rosneft has closed the $1.27 billion deal to sell 15 percent stake in Vankorneft to Indian state owned firm ONGC Videsh (OVL).

On September 4, 2015 Rosneft and OVL, the overseas arm on ONGC, signed the sale and purchase agreement. The document was signed by Igor Sechin, Rosneft Chairman of the Management Board, and Narendra Verma, Managing Director of OVL. The deal got Russian government's go ahead in March this year. 

“The closed transaction is symbolic for both the companies and marks transition to a new level of cooperation in the Russian-Indian relations in sphere of energy. ONGC gets substantial interest and relevant rights in one of the biggest large-scale projects of Rosneft of the last decade, whereas Rosneft retains major shares in the project and will operate on the field through the operator company RN-Vankor,” Rosneft said on Tuesday.

This acquisition also has significant strategic importance to India, both in terms of augmentation of India’s energy security as well as adding a new dimension to the relationship between Rosneft and OVL. 

Vankorneft is a 100-percent subsidiary of Rosneft, and Vankor is the largest oil and gas field discovered in Russia in the past 25 years. The field is located in the North of Eastern Siberia. Plans are in place to produce about 500 million tonnes of oil and about 182 billion cubic metres of gas jointly by the Russian and Indian sides at this field alone. 

In March, the two parties also signed an initial deal which would allow the Indian to firm buy additional 11 percent stake in Vankorneft. The finer details of this deal are yet to be worked out. 

As on January 1, 2016 Vankor field 2P reserves by PRMS classification are 265 mln tonne of oil and condensate and 88 bcm of gas, according to Rosneft website.