ONGC Videsh Ltd, the overseas arm of state-owned Oil and Natural Gas Corporation (ONGC), is likely to take a 20 per cent stake in Russia's Sakhalin-1 oil and gas project in the far east, sources said. 

COMMERCIAL BREAK
SCROLL TO CONTINUE READING

Russian President Vladimir Putin earlier this month disbanded Exxon Neftegaz - a regional subsidiary of US supermajor Exxon Mobil - as operator of the Sakhalin-1 and transferred the project and all of its assets and equipment to a new operator. 

One of the major former foreign shareholders in the project include Japan's Sodeco consortium and ONGC Videsh – who have to apply to the Russian government to regain their shareholdings in the project. 

OVL is in the process of applying to regain the 20 per cent stake it held in the project, three sources aware of the matter said. 

"We want to retain the shareholding and will do all that the local law requires us to do," a source said.
Sakhalin-1 is OVL's cash cow and without the project, the company will be a loss-making entity, another source said. 

Production from Sakhalin-1 stopped in May 2022 after Exxon Neftegaz declared force majeure at the project in response to international sanctions imposed on Russia following its invasion of Ukraine in February. Since then, OVL is facing cash issues, the source said. 

OVL currently holds stakes in 33 oil and gas assets in 15 countries, most of these being exploration assets. Sakhalin-1 is one of the oldest investments of OVL, where it has recovered all the money sunk in and was enjoying dividends. 

Sakhalin-1, an oil and gas field in far-east offshore Russia, is spread over 1,140 square kilometers. It includes three offshore fields namely Chayvo, Odoptu, and ArkutunDagi. OVL acquired a 20 per cent stake in the project in July 2001. 

Sakhalin-1 has a record of producing 220,000 barrels per day of oil before the Ukraine war. Of this OVL's share was 44,000 BPD or 2.2 million tonnes per annum. 

Exxon Neftegas Limited (ENL) and Sodeco held a 30 per cent stake each. The remaining 20 per cent is held by Russia's Rosneft through its subsidiaries SMNG (11.5 per cent) and RN Astra (8.5 per cent).