India set to buy 49% in Russia oilfield by Feb

A consortium of Indian companies led by ONGC Videsh (OVL) is likely to acquire a 49 percent stake in Russia’s Vankor cluster oilfields owned by Rosneft by February 2018.

While OVL, a fully-owned subsidiary of state-run Oil and Natural Gas Corporation, is expected to hold 26 percent stake in the cluster, remaining players — Indian Oil Corporation (IOC), Oil India (OIL), Hindustan Petroleum Corporation (HPCL) and Bharat PetroResources (BPRL) — will also be partners in it.

“Oil India is heading the talks for the consortium. We are expecting to seal the deal by February next year,” said an official. The Vankor cluster includes three fields — Suzunskoye, Tagulskoye and Lodochnoye — in the north of the Krasnoyarsk territory in immediate neighbourhood of the Vankor field.

“The size of the deal is likely to be close to $1 billion. We are already in the advanced stage of talks,” he added.

Another official privy to the deal said, “We are in the stage of technical due-diligence. Financial due-diligence is yet to happen. Hence, the value of the (Vankor cluster) deal cannot be specified now.”

Last year, Indian companies bought a 49.9 percent stake in the Vankor field for $4.2 billion. It is the second largest field by production in Russia, which accounts for 4 percent of the country’s total oil produce. Rosneft continues to hold 50.1 percent stake in the block. Later, IOC, OIL and BPRL acquired 29.9 percent stake in Taas-Yuryakh oil field in East Siberia for $1.12 billion, taking the overall investments in Russian oil and gas industry last year to $5.46 billion. While Vankor produces about 442,000 barrels of oil per day (bpd), Taas produces about 21,000 bpd.

ONGC has recorded a 43 per cent increase in production to 12.8 million tonne of oil equivalent (MTOE) in 2016-17, compared to 8.9 MTOE in 2015-16. “The increase in our production figures is mainly owing to the acquisition of stake in Vankor. In FY18, we are expecting Vankor to contribute about 79 percent of our overall production, at around 6.3 MTOE,” ONGC had stated after its second-quarter results this year.

In the past three years, pushed by the Russian acquisitions, India has earned oil and gas assets to the tune of 15.8 MTOE abroad.

“In Vankor, we had acquired 26 percent by paying $2 billion. The acquisition cost came to as low as $3.5 per barrel, making it one of the most economically attractive deals for OVL,” said an ONGC official.

According to a Rosneft statement issued last year, a total of 88 wells were put into commercial production in the Vankor cluster, including 57 production wells, 27 intake wells and four water supply wells. “This year RN-Vankor plans to increase its drilling rate. Production drilling growth is expected to be reached due to the drilling rigs fleet increase and commercial drilling rate enhance at the Suzunskoye, Tagulskoye and Lodochnoye fields,” Rosneft had stated earlier this year.