Led by OVL, India firms consider buying stake in Rosneft

 PTI   New Delhi     Last Updated: June 23, 2016  | 21:00 IST
Led by OVL, Indian cos consider buying stake in Rosneft

Indian oil firms led by ONGC Videsh Ltd are considering buying a part of the $11 billion stake that Russia is selling in its biggest oil firm Rosneft, Petroleum Minister Dharmendra Pradhan said on Thursday.

Russia is looking at selling 19.5 per cent of state oil champion Rosneft OJSC, preferably to India and China.

"Our companies are looking into the offer. They are mulling if they can take some of that equity. They are looking into it," he said.

Rosneft produces more crude oil than Exxon Mobil Corp.

Asked who among the Indian state-owned oil firms is leading the talks, Pradhan said, "of course OVL is the company heading the discussions now. Others may join later."

Moscow is looking to cut its budget deficit through a stake sale in Rosneft and the preferred option for it is to a strategic partner rather than a public share offering that would be more susceptible to political instability.

Rosneft, whose current market value is put at about $55 billion, is among the companies sanctioned by the US over Russian involvement in Ukraine.

BP plc of UK had bought near 20 per cent stake in Rosneft in 2013, much before Russia got involved in Ukraine.

Pradhan, who earlier this month visited Moscow, said Russia is considering disinvestment in Rosneft and Indian companies will certainly evaluate the opportunity.

Rosneft last month completed sale of 15 per cent stake in Russia's second biggest oilfield of Vankor to OVL, the overseas arm of state-owned Oil and Natural Gas Corp (ONGC), for $1.268 billion.

During Pradhan's visit, it signed agreement to sell another 23.9 per cent in Vankor to a consortium of Oil India Ltd, Indian Oil Corp (IOC) and Bharat Petroleum Corp Ltd (BPCL) for another $2 billion.

It has signed preliminary agreement to sell another 11 per cent stake in the same field to OVL.

"When all these transactions close, Indian companies will have nearly 50 per cent stake in Vankor," Pradhan said.

Vankor field, located in East Siberia, is Russia's second largest field by production and accounts for around 4 per cent of Russian production. It currently produces about 422,000 barrels of oil per day.

"The production India will get from the near 50 per cent stake in Vankor is equal of roughly half of ONGC's current domestic oil production," he said.

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