Cabinet clears Indian consortium’s stake buy in Russian oilfield

New Delhi, Sep 28 (IANS) The Cabinet Committee on Economic Affairs (CCEA) on Wednesday approved the purchase by a consortium of Indian Oil, Oil India and Bharat Petroleum of stakes in two Russian oilfields for a total of $3.14 billion.

"CCEA has given its approval to an Indian consortium comprising OIL, IOCL and Bharat Petro Resources Ltd (BPRL) for acquiring 23.9 per cent stake in JSC Vankorneft and 29.9 per cent stake in LLC Taas-Yuryakh from Rosneft Oil Company (Rosneft), the national oil company of Russian Federation (Russia)," a Petroleum Ministry statement here said.

The acquisition in Vankorneft will provide 6.56 million tonnes of oil equivalent (MMTOE) while 29.9 per cent stake in Taas-Yuryakh will provide 0.5 MMTOE initially and 1.5 MMTOE by 2019, the statement said.

"The acquisition is in line with India’s stated objective of adding high quality international assets to its exploration and production portfolio and thereby augmenting India’s energy security," it added.

The consortium will be paying $2,020.35 million for acquiring stake in Vankorneft and $1,242 million for Taas-Yuryakh.

Rosneft operates Vankor and Tass-Yuryakh fields and these are its wholly owned subsidiaries.

The licence for the central block is valid till 2041 and the northern block till 2032.

The consortium will buy another 23.9 per cent in JSC Vankorneft, a subsidiary of Rosneft, which holds two licences for the Vankor oilfields in East Siberia valid till 2112.

"The acquisition will add 8.06 MMTOE to India’s overseas oil and gas asset. It will also provide an opportunity to Indian public sector oil and gas companies to absorb newer technologies with Rosneft and British Petroleum (BP). BP acquired 20 per cent stake in Taas-Yuryakh from Rosneft last year," the ministry said.

Earlier this month, state-run explorer Oil and Natural Gas Corp (ONGC) announced it has signed definitive agreements with Rosneft to purchase additional 11 per cent stake in JSC Vankorneft.

"The daily production from the field is around 421,000 barrels per day (bpd) of crude oil on an average and together with the earlier acquisition of 15 per cent, ONGC Videsh’s share of daily oil production from Vankor will be about 110,000 bpd," ONGC said in a statement here.

"Vankor — that operates the Vankor oil and gas fields in Siberia — is Rosneft’s second-largest field by production and accounts for 4 per cent of Russia’s production," it said.

The definitive agreement was signed in Moscow on September 14 by ONGC’s overseas arm ONGC Videsh Ltd’s (OVL) Chief Executive Officer Narendra K. Verma and Chairman Igor Sechin of the Rosneft board of directors, ONGC said.

Once the transaction is completed, OVL will have 26 per cent stake in JSC Vankorneft, along with the 15 per cent acquired in May 2016.

According to ONGC, the acquisition of this extra 11 per cent would add about 30 per cent to OVL’s existing production, and about 2.2 million tonnes of oil and 1 billion cubic metres of gas annually, the statement said.

Following his Russia visit in June, Union Petroleum Minister Dharmendra Pradhan announced here that a consortium of Indian oil companies led by ONGC Videsh was considering purchase of a part of the $11 billion stake that Russia was selling in Rosneft.