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HPCL joins talks to buy stake in Russian oil fields

LiveMint logoLiveMint 26-06-2017 PTI

New Delhi: State-owned Hindustan Petroleum Corp. Ltd (HPCL) has joined the Indian consortium negotiating buying a 49% stake in Russia’s Vankor Cluster oil fields in the Arctic region.

Originally, ONGC Videsh Ltd (OVL), the overseas investment arm of state-owned Oil and Natural Gas Corp. Ltd (ONGC), signed an MoU to explore buying a stake in Suzunskoye, Tagulskoye and Lodochnoye fields— collectively known as Vankor Cluster.

Later, Indian Oil Corp. Ltd (IOC), Oil India Ltd (OIL) and Bharat PetroResources Ltd (BPRL), a unit of Bharat Petroleum Corp. Ltd, came in using the influence of the oil ministry. Now, HPCL has shown interest and has joined the talks, sources privy to the development said.

Rosneft, Russia’s national oil company that owns the fields, wants to retain a majority stake and is keen to sell only up to 49% stake. Sources said OVL is keen to take the largest share of 20 -26% as the project had originally come to it and others joined in later.

If OVL takes 26% stake, OIL-IOC-BPRL-HPCL may have 23.9%, they said. Vankorneft, a subsidiary of Rosneft, is developing the Vankor oil and gas condensate field, situated in the northern part of eastern Siberia.

In 2013, Vankorneft was chosen as an operator on development of new fields of Vankor Cluster located close to the Vankor field. The reserves of Suzunskoye field exceed 56 million tonnes of oil and condensate and 35 billion cubic metres of gas.

Last year, OVL first acquired 15% in Russia’s second-biggest oil field of Vankor for $1.27 billion and then bought another 11% for $930 million. The 26% stake would give OVL 7.31 million tonnes of oil.

The consortium of OIL-IOC-BPRL acquired 23.9% stake in the field at a cost of $2.02 billion, giving them 6.56 million tonnes of oil. Rosneft continues to hold the remaining 50.1% shares of JSC Vankorneft. The field has recoverable reserves of 2.5 billion barrels.

Besides, the OIL-IOC-BPRL consortium has taken another 29.9% stake in a separate Taas-Yuryakh oil field in East Siberia for $1.12 billion. The investments have taken the total outlay in Russia this year to $5.46 billion.

These investments will give India 15.18 mt of oil equivalent. These compare to $28.48 billion investment by Indian companies overseas in the past 50 years, leading to about 10 million tonnes of oil equivalent. While Vankor produces about 4,42,000 barrels of oil per day (bpd)—that is, 4% of Russian crude oil production—Taas produces about 21,000 barrels per day of oil, and a peak of 1,00,000 bpd is expected by 2021.

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