The Hindu : Business : OVL eyes stake in Russian oil firm

Online edition of India's National Newspaper
Tuesday, Dec 28, 2004

Business

Business

OVL eyes stake in Russian oil firm

NEW DELHI, DEC. 27. ONGC Videsh Ltd. (OVL), the foreign arm of Oil and Natural Gas Corporation, is eyeing equity in Russia's fast growing oil firm Sibneft and has tied up with Russian Rosneft for the purpose. "OVL and Rosneft have entered into a confidentiality agreement to acquire Sibneft," a senior company official said.

Rosneft had made it clear that OVL would be their first preferred partner for such acquisitions but OVL now expected that the situation might change with their merger with Gazprom. Independent observers feel Rosneft-Gazprom would be the ultimate beneficiary of Sibneft. OVL, which made unsuccessful attempts to tie up with Gazprom to bid for acquiring Russian oil firm Yukos' main producing asset Yuganskneft, also plans to participate in the vast, yet to be-developed East Siberian field.

Rosneft, Gazprom and Surgutneftegaz have been given East Siberia and Far East to develop. With the Rosneft-Gazprom merger, East Siberian fields would be taken up for development. The Russian Government companies do not have the financial muscle to acquire these firms, thus foreign companies would be required to support the merged entity's acquisition.

The official said OVL was also eyeing stake in Russia's Vankor oil and gas field and is looking at two other exploration blocks of Russian oil firm Rosneft. OVL was also looking at partnering Rosneft in Sakhalin-3 oil and gas fields in Far East Russia. It expects 10-20 per cent stake in the three fields forming Sakhalin-3 project, he said.

It already has 20 per cent stake in Sakhalin-1 that will begin gas production from the third quarter of 2005. Crude oil from the offshore fields will commence from January 2006 with initial output of 50,000 barrels a day. India's share in gas would be 5-8 million standard cubic metres a day with 20 per cent in crude oil. ExxonMobil is the operator of Sakhalin-1 with 30 per cent while Sodeco of Japan has 30 per cent. The remaining 20 per cent is with Rosneft of Russia.

— PTI

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