NEW DELHI: The Cabinet today approved ONGC Videsh Ltd buying 15 per cent stake in Russia’s Vankor oilfield for $1.26 billion, the first oil deal since the Narendra Modi-led government came to power.
OVL, the overseas arm of state-owned Oil and Natural Gas Corp (ONGC), will get 4 million tonnes of oil and oil equivalent gas for the stake in Vankorneft, the developer of the Vankor oil and gas condensate field in Turukhansky district of Krasnoyak Territory in Russia.
The deal, the first overseas acquisition by an oil PSU since the NDA regime came to power in May 2014, was approved at the meeting of the Cabinet this evening. Modi was keen to see the deal through which will help India’s energy security, sources said.
“We were able to get the deal through with the proactive involvement of the government,” OVL Managing Director N K Verma told PTI here.
The field has recoverable reserves of 2.5 billion barrels.
OVL had in September signed definitive agreements to acquire up to 15 per cent shares in CSJC Vankorneft, a company organised under the law of Russian Federation which is the owner of Vankor Field and North Vankor licence.
Rosneft, Russia’s national oil company, holds 100 per cent stake in Vankorneft. The acquisition is subject to relevant board, government and regulatory approvals and is expected to be completed by 2016-mid, sources said.
This will be the fourth biggest acquisition by OVL. It had in 2013 paid $4.125 billion for a 16 per cent stake in Mozambique’s offshore Rovuma Area 1, which holds as much as 75 Trillion cubic feet of gas reserves.
In 2009, it had bought Russia-focused Imperial Energy for $2.1 billion. Prior to that, it had in 2001 paid $1.7 billion for a 20 per cent interest in the Sakhalin-1 oil and gas field off Russia’s far eastern coast.
“Vankor is Rosneft’s (and Russia’s) second largest field by production and accounts for 4 per cent of Russian production. The daily production from the field is around 4,42,000 barrels per day of crude oil.
Upon completion of the deal, OVL will have two seats on the board of Vankorneft. Rosneft, whose stake in the project will come down to 85 per cent, will however keep full control of the general infrastructure of Vankor cluster, including oil pipeline Vankor-Purpe.