India Approves OVL's Vankorneft Deal

India’s Cabinet Committee on Economic Affairs (CCEA), chaired by the prime minister Narendra Modi, October 5 approved an acquisition by ONGC Videsh (OVL) of 11% stake in Vankorneft, a subsidiary of Russian Rosneft, which operates Siberian Vankor fields.

OVL will be paying $930mn for acquiring the stake which will provide 3.2mn metric tons of oil equivalent to OVL by 2017, the government said.

Last week, the CCEA gave the green light to a deal signed by an Indian consortium comprising Oil India (OIL), Indian Oil Corporation (IOCL) and Bharat PetroResources (BPRL) to acquire 23.9% stake in Vankorneft for $2.02bn. Earlier in May, OVL completed the formalities on acquisition of 15% stake in Vankorneft at a cost of $1.28bn. Indian state energy firms now own 49.9% stake in Vankorneft.

With US and EU sanctions in place, Moscow is looking to expand energy exports in fast growing Asian economies such as China and India, but also with Indonesia. Rosneft and Indonesian state Pertamina agreed in May 2016 a co-operation deal that may lead to a Russian investment in a refinery in eastern Java; and to Pertamina becoming an equity holder in some of Rosneft's upstream interests in Russia.

Shardul Sharma