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ONGC Videsh, the overseas arm of state-run explorer ONGC, will take more time to seal agreements with Russia's Rosneft to pick up equity stakes in two blocks in East Siberia. The two national oil companies are likely to sign an MoU during Russian President Vladimir Putin's visit to India.
"The vision document that will be highlighting energy cooperation between India and Russia will lack hard details as the terms between the two sides are still being thrashed out for ONGC Videsh to acquire an interest in Rosneft's Vankor and Yurubcheno-Tokhomskoye oilfields," an official source told FE.
OVL is in talks with Rosneft to pick up stakes in two blocks in East Siberia in two separate deals. The exact sizes of the deals are not known but are believed to have combined worth of around $2 billion.
A director on the Board of OVL said the company is still `looking at the data,' and would take more time to finalise the deals.
In one of the deals, OVL is looking at picking up a 10% stake in the Vankor fields that are producing crude oil. The field, which has been under production since August 2009, produces more than 4,00,000 barrels of oil per day, double the output of Barmer, India's largest onshore field, which is operated by Cairn India. The second deal OVL is discussing with Rosneft is to buy equity in a greenfield project, Yurubcheno-Takhomskoye. This is a discovered asset and OVL is evaluating picking up 49% stake.
The proposed deals will bolster the asset base of OVL, whose overseas forays are a key part of India's energy security strategy. The company, with cumulative investments abroad up to March 31, 2014, of over $22 billion, has stakes in 33 oil and gas projects in 16 countries. It produced 8.36 million tonnes of oil and oil equivalent gas in 2013-14 as against 0.252 million tonnes annually a decade ago.
The area of the Vankor field is nearly 416.5 square km. According to Rosneft, the initial recoverable reserves in the field are 500 million tonnes of oil and condensate, and 182 billion cubic metres of gas as of January 2014.
Oil and gas condensate production in 2013 was 21.4 million tonnes, which is 17% more than in the previous year. Currently, the daily production rate is 9% more than at the same period in 2013, according to the Rosneft website.
In July, Rosneft came under the umbrella of US sanctions imposed on the country for its actions in Ukraine. The firm has sought financial support to the tune of $40 billion to offset sanction-hit measures.
According to an industry watcher, Rosneft is trying to sell stakes in its prolific assets to mop up funds. Interestingly, Putin has also invited China to invest in the Vankor fields.
Earlier, Putin was quoted as saying, "Overall, we take a cautious approach to letting in our foreign partners, but we of course set no restrictions for our Chinese friends."
A recent report said China has long sought access to Russia's upstream sector in return for capital investments in Russian export pipelines, but Moscow has been reluctant to grant foreign companies equity stakes in conventional onshore oil and gas deposits.
The Yurubcheno-Takhomskoye project has the potential to produce 1 billion barrels per annum after three years.
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