ONGC closes acquisition of 15% stake in Vankor

ONGC closes acquisition of 15% stake in Vankor

ONGC Videsh and Rosneft have closed the transaction of selling 15% shares in Vankorneft.

The Dollar Business Bureau

ONGC Videsh Ltd. (OVL) and Rosneft Oil Company have completed the acquisition of 15% shares in Vankorneft JSC, ONGC said in an announcement on Tuesday. In September last year, ONGC had signed a proposal to acquire 15% stake in Russia’s second biggest oil field of Vankorneft from Rosneft for $1.27 billion.

“The closed transaction is symbolic for both the companies and marks transition to a new level of cooperation in the Russian-Indian relations in the sphere of energy,” Rosneft said in a statement.

“ONGC gets substantial interest and relevant rights in one of the biggest large-scale projects of Rosneft of the last decade, whereas Rosneft retains major shares in the project and will operate on the field through the operator company RN-Vankor,” it added.

Rosneft Oil Company will hold the outstanding shares of around 85% of JSC Vankorneft as the field has recoverable capitals of 2.5 billion barrels and may give OVL 3.3 million tonnes per annum of oil production.

Rosneft has also agreed to sell another 11% stake in Vankor to OVL. The daily oil production of Vankor is nearly 442,000 barrels per day. It is the second largest field of Rosneft by production and accounts for 4% of Russia’s crude oil production. With the completion of this agreement, shares of daily oil production of OVL will be around 66,000 barrels per day.

This acquisition also strengthens OVL's presence in Russia, and it is consistent with the company’s strategic objective of bringing in high-quality international assets to its existing E&P portfolio.

This is the fourth largest achievement by OVL. In 2013, it had bought 16% stake in Mozambique's offshore Rovuma Area 1, which holds almost 75 trillion cubic feet of gas reserves, for $4.125 billion.

The Dollar Business Bureau - Jun 01, 2016 12:00 IST