MOSCOW (MRC) -- State-owned ONGC Videsh Ltd (OVL) has evinced interest in acquiring another 10% in Russia’s second-largest oilfield (by production), owned by OAO Rosneft, taking its total stake in CSJC Vankorneft to 25%, reported LiveMint with reference to a person familiar with the matter.
In response to a query about OVL’s interest in acquiring another 10% stake in Vankorneft, N.K. Verma, managing director of OVL, said: "At the moment we have agreed for a 15% stake."
The person familiar with the matter, who asked not to be identified, said the 10% additional stake was that which was originally offered to China National Petroleum Corp.
OVL, Mint learns, is also considering other acquisition opportunities in Russia.
Earlier this month, OVL, the overseas arm of Oil and Natural Gas Corp. Ltd (ONGC), said it was buying a 15% stake in the OAO Rosneft subsidiary for USD1.26 billion.
At that price, the additional 10% stake will be valued at around USD840 million. The deal was structured with crude oil prices pegged between USD60 and USD70 per barrel. Rosneft claims to have the world’s lowest production cost per barrel of USD2.8 per barrel.
Indian investments in Russia, mainly in the hydrocarbon sector, total around USD4.25 billion. OVL has invested USD23.81 billion in overseas assets till date.
The acquisition in CJSC Vankorneft will give OVL access to the crude oil being produced by the company. Vankorneft operates the Vankor field, in the Turukhansky district of Krasnoyarsk province, which has an output of 22 million tonnes (mt) per annum. A 15% stake will give OVL 3.3 mt of oil per annum as per its entitlement, with the effective value date of the agreement being 31 May. A 25% stake would give it 5.5 mt of oil a year.
We remind that, as MRC wrote before, in September 2015, China National Chemical (ChemChina) signed a memorandum of understanding (MoU) with Rosneft to acquire a majority stake in Far-East Petrochemical Company (FEPCO) project in Nakhodka, Russia. The agreement was signed by Rosneft management board chairman Igor Sechin and ChemChina chairman Ren Jianxin during Russia President Vladimir Putin's visit to China. The transaction is subject to due diligence, and corporate and regulatory approvals. "The achieved agreements are indicative of a special level of cooperation with our Chinese partners."
MRC