OIL explores options to bring back millions stuck in Russia

In an interview, Rath said the money is currently parked in SBI’s Moscow branch. OIL is part of two Indian consortiums that have stakes in several Russian oilfields in Siberia.

One consortium of OIL, Indian Oil Corp and Bharat Petroresources Ltd holds 23.9% stake in CSJC Vankorneft, the owner of Vankor Field and North Vankor.

The three firms are part of another Indian state run firms’ consortium that owns 29.9% of LLC Taas-Yuryakh.

ONGC Videsh (OVL) holds another 26% stake in SCJC Vankorneft.

Mint has reported that OVL, Bharat Petroresources Ltd, Indian Oil Corp, and Oil India Ltd have around $400 million in stuck dividend payments from from CSJC Vankorneft and LLC Taas-Yuryakh.

The amount is stuck in Russia because of difficulties in transferring dividend payments from Russia due to western sanctions on Russian energy companies.

“We got the money in the initial days, which was repatriated comfortably. Subsequently, because of the unfortunate incident (Russian’s invasion of Ukraine) and the consequential sanctions, the money is safely parked in SBI Moscow," Rath said.

“Today, as we speak, around $150 million is stuck there. But we are confident that it is only a matter of time; it is a temporary restriction. We will be able to (repatriate).... because we are having legal opinion. They are evaluating various other possibilities."

Rath said that although the priority is to get the dividends repatriated, other viable options would also be explored such as reinvesting the money in Russia.

“Right now the thought process is we are evaluating multiple options. One is, can we have this invested there or we get it repatriated to our Singapore subsidiary. We are looking at both the options. The other alternative could be can we have an investment in a similar asset. Is that an opportunity? Right now, we are actually evaluating the possibilities of getting the money repatriated. But, the alternatives are being evaluated," he said.

The CMD added: “We have engaged a legal consultant. We have also engaged a tax consultant to guide us on how we do this transaction. We are also talking at a government-to-government level. So, all the channels are getting worked on." In total Indian oil and gas companies currently have dividends of around $600 million stuck in their investments in Russian oil assets.

Last year seven Russian banks were removed from the ‘SWIFT’ platform, which is used for international transactions, after Russia invaded Ukraine in February. In retaliation, Moscow also restricted dollar repatriation from Russia to check volatility in Rouble exchange rates. Indian oil and gas companies have invested around $16 billion in Russian energy assets.

Over the past 18 months, Russia has become the top supplier of crude oil to India on the back of its deep discounts. During April-July this year, import of crude from Russia stood at $15.74 billion, nearly 127% higher than the $6.93 billion during the corresponding period of the last fiscal. In FY22, Russian oil accounted for only 2% of India’s total oil imports; in FY23, it made up around one-fourth of the 235.52 million tonnes of crude oil imported by India. India, the world’s third-largest oil importer, was getting a steep discount on oil cargoes from Russia till a few months back. Russia emerged as the largest supplier to energy import-dependent India in FY23, as the country scooped up supplies shunned by others because of sanctions.

Although its discounts have narrowed down to around $4 per barrel, supplies from Russia are still higher than the traditional oil suppliers of West Asia.

In a bid to raise global oil prices, Russia along with other OPEC+ countries has announced output cuts. On the back of supply concerns, oil prices have been hovering above $90 per barrel in the past few weeks.

At the time of writing, the November contract of Brent on the Intercontinental Exchange was trading at $95 per barrel, higher by 1.11% from its previous close.

The Indian basket of crude oil on 26 September was at $93.17 per barrel, against an average of $74.93 in June.