India Signs Deal for Additional 11% Stake in Russia’s Largest Oil Field

New Delhi (Sputnik) — India’s ONGC Videsh Ltd. (OVL) has signed a definitive agreement with Russian oil company Rosneft to acquire an additional 11% of Vankorneft. Vankorneft is a Rosneft subsidiary and owns the Vankor Field and North Vankor license.

“The acquisition of an additional 11 % bears significant strategic importance and would add about 30% to ONGC Videsh’s existing production at the current rate and  approximately 2.2 MMt of oil and 1.0 BCM of gas annually,” read a statement released by OVL.

The agreement was signed by Narendra K. Verma, CEO & Managing Director, on behalf of OVL and Igor Sechin, Chairman, Board of Directors, Rosneft in Moscow on Tuesday.

“We are grateful to our Indian colleagues for their professional approach to the implementation of this complex transaction. A year ago during the Eastern Economic Forum, we signed an agreement to sell 15 percent of Vankorneft. Today we have signed the documents that will increase ONGC’s share in this asset. This is an indication of the high quality of cooperation between us and, I hope, a basis for the further development of the business dialogue between our companies,” Rosneft CEO Igor Sechin said on the signing of the documents.

The deal is expected to be sealed by the end of this year. Earlier in May this year, OVL had successfully acquired a 15% shareholding interest in Vankorneft. Though OVL officials refused to disclose the price of the additional 11% stake, sources told Sputnik that it would be almost the same amount paid for the 15% stake that was acquired earlier.

OVL had paid $1.268 bln for their 15% stake in Vankorneft.

Last week, Dinesh K Sharaf, Chairman and Managing Director of ONGC said, “After the acquisition of 15%, a consortium of Oil India, Indian Oil and BPCL have acquired a 23.99% stake in this particular company and this is at the same price as the first 15%.”

Vankor is Russia’s second largest field by production and accounts for 4% of all Russian production. The daily production from the field is around 421,000 bpd of crude oil on average. With a total 26% stake, OVL’s share of daily oil production from Vankor will be about 110,000 bpd.

This acquisition has significant strategic importance to India, both in terms of augmentation of India’s energy security as well as enhancing India’s stature in the global political and economic arena. At present, ONGC Videsh has 37 projects in 17 countries including Azerbaijan, Bangladesh, Brazil, Colombia, Kazakhstan, Mozambique, Myanmar, Russia, South Sudan, Sudan, Venezuela, Vietnam and New Zealand.