OVL, Rosneft ink pact for 11% stake in Vankorneft

NK Verma, CEO & MD, OVL and Igor Sechin, chairman Board of Directors, Rosneft in Moscow

THE overseas arm of ONGC, OVL (ONGC Videsh) and its subsidiary ONGC Videsh Vankorneft have jointly signed definitive agreements with Rosneft, the Russian national oil company, for acquisition of an additional 11 per cent stake in JSC Vankorneft, the operator of the Vankor oil fields in East Siberia for about USD 930 million.
ONGC Videsh had earlier acquired a 15-percent stake in the Vankorneft on May 31. After the latest acquisition is complete, ONGC Videsh stake in Vankorneft will increase to 26 per cent.
The board of directors of both the companies and the governments of India and Russia will have to approve the deal.
The OVL said in a statement that the transaction is expected to close by the end of the calendar year.
Vankor is Rosneft's second largest field by production and accounts for 4 per cent of Russian production. The daily production from the field is around 421,000 barrels per day of crude oil on an average and together with earlier acquisition of 15 per cent, ONGC Videsh’s share of daily oil production from Vankor will be about 110,000 barrels per day.
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.
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 4,21,000 barrels per day of crude oil on an average and together with earlier acquisition of 15 per cent, OVL's share of daily oil production from Vankor will be about 1,10,000 bpd.
"The acquisition of additional 11 per cent bears significant strategic importance and would add about 30 per cent to the existing OVL's production at the current rate and approximately 2.2 million tons of oil and 1.0 billion cubic meter of gas annually," OVL said in a statement.
Vankor is Rosneft’s (and Russia’s) second largest field by production and accounts for 4 percent of Russian production.
The daily production from the field is around 421,000 bpd of crude oil on an average and together with earlier acquisition of 15 percent, ONGC Videsh’s share of daily oil production from Vankor will be about 110,000 bpd.
The present transaction provides an opportunity to ONGC Videsh to enhance its presence in Russia and is consistent with its stated strategic objective of adding high quality international assets to its existing E&P portfolio. This acquisition also 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 arenas.
ONGC Videsh is a wholly owned subsidiary of Oil and Natural Gas Corporation Limited (ONGC) and is India’s largest international oil and gas E&P company. 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. ONGC Videsh is currently producing about 215,000 barrels of oil and oil equivalent gas per day and has total oil and gas reserves of about 596 MMTOE as on March 31, 2016.