OVL to ink $1.27-bn Russia Vankor stake buy pact today

An agreement formalising ONGC Videsh Ltd’s $1.268 billion acquisition of 15 per cent stake in Russia’s second biggest oil field of Vankor will be signed in Moscow on Thursday.  The agreement, to be signed after talks between Prime Minister Narendra Modi and Russian President Vladamir Putin, will mark the completion of phase-1 of the deal, the first overseas acquisition since the NDA government came to power.

 

OVL, the overseas investment arm of state-owned Oil and Natural Gas Corp (ONGC), had on September 4 signed Share Purchase Agreement (SPA) and Shareholders Agreement (SHA) with Vankorneft, a unit of Rosneft that is the developer of the Vankor oil and gas condensate field in Turukhansky district of Krasnoyak Territory in Russia.

The field, which has recoverable reserves of 2.5 billion barrels, will give OVL 3.3 million tonnes per annum of oil production. As per the agreement, OVL had the right to walk out of the deal by October 31 but it choose to stay on and two subsequent agreements were signed, a top source said.

The agreements signed subsequently were for marketing of oil and oilfield services agreement, marking the completion of Phase-1 of the deal, he said.

A pact between OVL and Rosneft, marking this milestone, will be signed on second day of Modi’s two-day visit to Russia. The entire acquisition will be completed in 3-4 months after Rosneft does a reorganisation of the Vankor field and other regulatory approvals including from Russian anti-monopoly authority are obtained. Rosneft, Russia’s national oil company, holds 100 per cent stake in CSJC Vankorneft, a company organised under the law of Russian Federation which is the owner of Vankor Field and North Vankor licence.” 

This will be the fourth biggest acquisition by OVL. It had in 2013 paid $4.125 billion for a 16 per cent stake in Mozambique’s offshore Rovuma Area 1, which holds as much as 75 Trillion cubic feet of gas reserves. In 2009, it had bought Russia-focused Imperial Energy for $2.1 billion. Prior to that, it had in 2001 paid $1.7 billion for a 20 per cent interest in the Sakhalin-1 oil and gas field off Russia’s far eastern coast.