ONGC co eyes bigger role in oil field that Russia may take over

ONGC co eyes bigger role in oil field that Russia may take over

NEW DELHI: Amid talks of Moscow considering nationalising Sakhalin-I project, state-run ONGC Videsh Ltd (OVL) is deploying additional manpower to share with Kremlin-backed Rosneft a bigger role in operating the oil field following ExxonMobil’s withdrawal.
A Reuters report from Moscow on Thursday quoted Pavel Zavalny, who heads the energy committee in the Lower House of Russia’s parliament, as saying nationalisation of Sakhalin-I was an “obvious” step after the takeover of the Sakhalin-II project after Shell’s exit.

The report, however, also quoted Kremlin spokesperson Dmitry Peskov as saying that no decision had been taken on Sakhalin-I.
OVL and Rosneft have 20% stake each in Sakhalin-I, located in the Russian Far East. ExxonMobil and SODECO, a consortium of Japanese firms, hold 30% each. Output has declined to 10,000 barrels per day (bpd) from 220,000 bpd.
After ExxonMobil said on March 1 it will discontinue operations in response to Russia’s military action in Ukraine and co-ordinate a gradual withdrawal with the partners, OVL offered to send more personnel with suitable expertise to partially fill the void. People in the know said Rosneft has open to the proposal and scrutinising the list of personnel suggested by OVL.
The people cited above said in case the government decides to nationalise, as seen in case of Sakhalin-II, the Moscow will transfer the project to a new company and ask the partners, irrespective of whether they want to stay on or not, to buy into the new entity. Those who want to exit can then sell their stake in the new company. This arrangement will prevent loss of value for Russia or other investors due to distress sale by the exiting partner.
“OVL never said it wants to exit and has a long-standing relationship with Rosneft. OVL had funded Rosneft’s stake in the project initially. So one can assume OVL’s interest will be safeguarded (in case of nationalisation),” one person said.
The Russian government has nationalised the Sakhalin-II oil and gas project after Shell announced its exit and wanted to sell its stake.

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