India marches ahead to achieve its energy security goals, $3.14 bn approved for buying stake in 2 Russian oil and gas fields

The approval was given for purchasing a 29.9% stake in LLC Taas-Yuryakh and another 23.9% in Vankor oilfield for $2.02 billion by an Indian Consortium comprising Oil India Limited (OIL), Indian Oil Corporation Limited (IOCL) and Bharat Petro Resources Limited (BPRL)

India marches ahead to achieve its energy security goals, $3.14 bn approved for buying stake in 2 Russian oil and gas fields

In line with India’s stated objective of adding high quality international assets to its Exploration & Production portfolio and thereby augmenting the country’s energy security, the Cabinet Committee on Economic Affairs, chaired by the Prime Minister Narendra Modi on Wednesday (September 28) gave its approval for acquiring stakes in two Russian fields for a total value of $3.14 billion (or close to Rs 20,875 crores with one US dollar @ Rs 66.48).

The approval was given for purchasing a 29.9% stake in LLC Taas-Yuryakh and another 23.9% in Vankor oilfield for $2.02 billion by an Indian Consortium comprising Oil India Limited (OIL), Indian Oil Corporation Limited (IOCL) and Bharat Petro Resources Limited (BPRL).

Rosneft Oil Company (Rosneft), the National Oil Company (NOC) of Russian Federation (Russia) operates Vankor and Tass-Yuryakh fields and are its wholly owned subsidiaries.

The acquisition of stake in Vankorneft will provide 6.56 Million Metric Ton of Oil Equivalent (MMTOE) and the stake in Taas-Yuryakh will provide 0.5 MMTOE initially and 1.5 MMTOE by 2019.

The Consortium will be paying US $ 2020.35 million for acquiring stake in Vankorneft and US $ 1242 million for acquiring stake in Taas-Yuryakh. Earlier in May 2016 ONGC Videsh Ltd (OVL) completed the formalities of acquiring 15% stake in Vankorneft at the cost of US $ 1.284 billion which gave OVL 4.11 MMTOE.

The acquisition will add 8.06 MMTOE to India’s overseas oil and gas asset. It will also provide an opportunity to Indian public sector Oil and Gas companies to absorb newer technologies with Rosneft and British Petroleum (BP). BP acquired 20% stake in Taas-Yuryakh from Rosneft last year.

Domestic oil and gas explorer Oil and Natural Gas Corporation, bought a 15% stake in Vankor in December 2015. That deal closed on May 31 this year and the company has signed a deal for buying another 11% in the field.

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Taas-Yuryakh produces about 21,000 bpd (barrels per day) of oil and a peak of 100,000 bpd is expected by 2021. Vankor is past its peak, which was 161 million barrels (22 million tonnes) in 2014 and 2015. It now produces 154 million barrels.

Rosneft had last year sold 20% stake in Taas-Yuryakh to BP for $750 million. The Russian firm will hold 50.1 per cent stake in the project after the deal with the Indian consortium.

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