No way out of Moscow: Why Indian oil companies’ $1.4 billion worth of dividends are stuck in Russia
Indian public sector oil companies are facing a $1.4-billion question: how to repatriate their dividend income that has been piling up in Russia for over three years now? The Indian government and the companies have been attempting to find a resolution, but success has so far eluded them. While they are confident that the money is safe, as dividends from their investment in Russian oil assets are being deposited at regular intervals in the companies’ accounts in an Indian bank in Moscow, they have been unable to access and use it. These stranded dividends originate from billions of dollars invested by Indian public sector oil companies over the years to acquire stakes in Russian producing oil and gas projects. These cumulative investments are estimated to be over $6 billion. This strategy forms a crucial part of India’s overall energy security plan, as India relies heavily on oil imports. The Indian companies include ONGC Videsh (OVL), the overseas investment arm of Oil and Natural Gas Corporation (ONGC). OVL holds a 20 per cent stake in the Sakhalin-1 project and a 26 per cent stake in the Vankor project. OVL’s share of the stuck dividends is close to $400illion. Then there is the consortium of Indian Oil Corporation (IOC), Oil India (OIL), and Bharat Petroleum Corporation (BPCL) arm Bharat PetroResources (BPRL), which together hold a 23.9 per cent share in Vankor and a 29.9 per cent share in the Taas-Yuryakh project. This consortium’s cumulative share of the stranded dividends is the larger portion, around $1 billion, according to industry estimates.
ONGC, BP plan to step up hunt for oil, gas in India’s deep-sea next year
Public sector upstream oil giant ONGC is poised to kick off the drilling of stratigraphic wells in India’s offshore basins at the beginning of next year as part of the country’s efforts to step up the search for oil and gas to enhance energy security and cut down on imports, a senior official has confirmed. The drilling, which will be carried out with the assistance of global oil and gas giant BP, will focus on the Andaman, Mahanadi, Saurashtra, and Bengal offshore sedimentary basins. The entire campaign will be carried out with an investment of Rs 32 billion. ONGC had signed an agreement with BP in July this year to form a partnership that will enhance geological understanding and unlock untapped hydrocarbon potential, strengthening India’s long-term energy security. BP’s experience in deep water exploration, supported by new seismic technologies, would be of great assistance during the well design and well location for the stratigraphic drilling. As part of the agreement, ONGC will be putting in money, while BP will provide expertise. The stratigraphic drilling will focus on understanding the geology of the offshore basins and identifying potential hydrocarbon resources which can be taken up for oil and gas exploration in the future.