ONGC to acquire additional 11 percent stake in Russia’s Vankorneft -Governance Now

ONGC to acquire additional 11 percent stake in Russia’s Vankorneft

This deal is expected to receive approvals from the boards of the companies as well as the Indian and Russian governments by the end of 2016

GN Bureau | September 17, 2016

#additional stake #Vankorneft #ONGC #India #Russia

State-run Oil and Natural Gas Corp. Ltd (ONGC) has signed definitive agreements with Russia’s national oil company Rosneft PJSC to acquire an additional 11 percent stake in its unit, JSC. It has a licence to produce hydrocarbons from the Vankor field in Siberia.

ONGC did not disclose the price at which the additional stake is being acquired, but it is estimated that it would cost around $924 million, according to a news report published in Mint.

Once the transaction is completed, ONGC Videsh Vankorneft Pte Ltd, a unit of the oil explorer, will hold a 26 percent stake in Vankorneft, including the 15 percent stake it had acquired earlier for $1.26 billion. That deal was concluded in May this year.

This deal is expected to receive approvals from the boards of the companies as well as the Indian and Russian governments by the end of 2016.

The acquisition of the extra 11 percent stake has significant strategic importance and would add about 30 percent to ONGC Videsh’s existing production at the current rate and about 2.2 million tonnes of oil and 1 billion cu. m of gas annually. A consortium of Indian Oil Corp. Ltd, Oil India Ltd and a unit of Bharat Petroleum Corp. Ltd on March 16 signed a similar agreement with Rosneft to buy a 23.9 percent stake in the Vankor oilfield for about $2 billion.

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