India’s ONGC eyes stake in Russian entity

Considers taking additional stake if it makes “commercial sense”

NEW DELHI:

India’s Oil and Natural Gas Corp (ONGC.NS) plans to take a stake in the new Russian entity that will manage the Sakhalin 1 project in the far east as it seeks to retain a 20% share in the asset, three sources familiar with the matter said.

Russian President Vladimir Putin earlier this month issued a decree to establish a new operator for the ExxonMobil (XOM.N)-led project and authorised the Kremlin to decide whether foreign shareholders could retain stakes in Sakhalin 1.

“ONGC Videsh will protect its share in the project, which means it will take a stake in the new entity,” said one of the sources.

ONGC holds a stake in the project through its overseas investment arm ONGC Videsh.

The new Russian entity, managed by Rosneft subsidiary Sakhalinmorneftegaz-shelf, will own investors’ rights in Sakhalin 1. Foreign shareholders have one month to decide on retaining stakes in the project.

Output of Sakhalin 1 collapsed after Exxon declared force majeure in April and refused to accept Russian insurance cover for the tankers as western insurers pulled out due to the sanctions, sources said.

Sakhlin 1 was producing 220,000 bpd before Russia launched its so-called “special military operations” in Ukraine.

Operatorship of the project by a Russian entity will lead to smooth functioning of Sakhalin 1 and would ensure shipping of oil, the sources said.

Published in The Express Tribune, October 19^th, 2022.

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