NEW DELHI : State run-ONGC Videsh Ltd (OVL) is exploring the transfer of its stake in Imperial Energy Corp. Plc’s Siberian deposits to a Russian firm to reduce potential losses from the $2.1-billion acquisition, said a person aware of the development.

The plan involves an equity swap under which OVL gets a stake in another asset of the Russian firm, in lieu of its stake in Imperial. Mint could not ascertain the name of the Russian firm.

ONGC’s move comes against the backdrop of sanctions on Russia, where India’s biggest oil and gas explorer owns stakes in significant hydrocarbon assets.

“Western firms had to exit working on our assets because of the sanctions imposed by the US. The local service providers have not been effective," the person mentioned above said on condition of anonymity.

Mint reported on 7 April 2015 about oilfield service contractors such as Halliburton and Baker Hughes Inc. withdrawing from the hydrocarbon assets of OVL in Russia after the US and the European Union (EU) imposed sanctions on the Vladimir Putin government.

Queries emailed to spokespersons of ONGC and OVL on Sunday evening remained unanswered till time of going to press.

ONGC has also set aside around $600 million to cover the impairment of Imperial’s asset value. The state-owned firm has decided to not invest more money in Imperial Energy until it has a suitable strategy in place. Russian conglomerate Sistema JSFC had valued Imperial Energy’s assets at $500 million, a quarter of the sum ONGC paid for the acquisition.

OVL’s acquisition of Imperial in 2009 to secure the Siberian deposits and reduce India’s dependence on imports failed to meet projections because of falling oil production, and prompted the Comptroller and Auditor General of India to fault the purchase in 2011. Mint reported on 17 June 2010 that OVL’s miscalculation was likely to raise doubts about the processes followed in the acquisition that was completed in 2009.

Imperial’s main asset is its Siberian fields with an acreage of around 16,800 sq. km.

ONGC has had a tenuous experience with Imperial, with the plan to acquire a 25% stake in the entity formed after the proposed merger of JSFC Sistema’s units JSC Bashneft and OAO RussNeft with UK-based explorer Imperial Energy coming unstuck. Also, OVL’s offer to Liberty Resources Llc of a stake of up to 30% in Imperial subject to Denver-based Liberty striking success in the Bazhenov shale formation in the region didn’t work out. Bazhenov may hold around 360 billion barrels of recoverable reserves.

OVL has invested $28 billion in 41 projects across 20 countries. It has probable reserves of 711.362 million metric tonnes of oil equivalent.

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