Moscow, New Delhi: Oil India Ltd, Indian Oil Corp. and Bharat PetroResources Ltd agreed to buy a 23.9% stake in Rosneft OJSC’s Vankor project, the largest oil field to be put into operation in Russia in the last 25 years.
The deal, announced by Rosneft on Friday at the St Petersburg International Economic Forum, is valued at $2.02 billion, according to two officials from companies involved in sale, who asked not to be identified because the price isn’t public.
Russia’s largest oil producer has been selling stakes in some assets to raise cash after oil prices collapsed amid a global supply glut. India, poised to overtake Japan as the world’s third-biggest oil user, is seeking to enhance its energy security by guaranteeing new sources of supply. Delhi-based Oil and Natural Gas Corp. Ltd (ONGC) bought a 15% share of Vankor in May for $1.27 billion, the same proportional price as Friday’s deal.
“It’s very important, it’s the biggest ever overseas acquisition by any Indian company,” Dharmendra Pradhan, minister for petroleum and natural gas, told reporters in St Petersburg.
The consortium’s purchase will be worth $2.1 billion when planned capital expenditures on the field are included, one of the people said.
ONGC Videsh Ltd, the international subsidiary of ONGC, intends to buy a further 11% stake of Vankor, Narendra Verma, the company’s chief executive officer, told reporters in St Petersburg. India would receive about 11 million tonnes a year from the project after that purchase, he said.
Rosneft expects production at Vankor to decline to around 21 million tonnes this year from 22 million last year, the company said 8 June at the first-quarter conference call. Indian investors are aware of the decline, Verma said. Bloomberg