NEW DELHI: ONGC Videsh (OVL) is moving to transfer about $600 million in roubles to Russia as its contribution in ‘abandonment fund’ for securing abandoned wells in the Sakhalin-I oil project, meeting a condition for registering its 20% stake with the new operator appointed by Moscow after ExxonMobil’s exit in 2022.
“We expect to make the transfer in a month or two.Rouble payment is the most viable option due to Western sanctions and banking restrictions on Russia as well as Moscow’s counter-sanctions. We can buy rouble and also use dividend of more than 16 billion roubles from Vankorneft project stuck in Russia,” a person aware of the discussions said.
OVL received its share of the abandonment fund, last estimated at $2 billion, from foreign-party administrator JP Morgan on April 6, 2023 but could not transfer it to Russia due to banking challenges. Transferring the fund was a key condition for formalising ONGC Videsh’s stake in the project under the new entity formed after ExxonMobil’s exit.
Moscow had seized the Sakhalin-I project in Oct 2022 after ExxonMobil’s exit due to Western sanctions, following Russia’s invasion of Ukraine in Feb that year. The rights of investors in the venture were transferred to Rosneft subsidiary Sakhalinmaorneftegaz-shelf and companies were asked to apply for equity afresh. ONGC Videsh’s stake was restored in Dec 2022 conditionally. The abandonment fund is built with revenue contribution in proportion to equity held by each member of the consortium.
“We expect to make the transfer in a month or two.Rouble payment is the most viable option due to Western sanctions and banking restrictions on Russia as well as Moscow’s counter-sanctions. We can buy rouble and also use dividend of more than 16 billion roubles from Vankorneft project stuck in Russia,” a person aware of the discussions said.
OVL received its share of the abandonment fund, last estimated at $2 billion, from foreign-party administrator JP Morgan on April 6, 2023 but could not transfer it to Russia due to banking challenges. Transferring the fund was a key condition for formalising ONGC Videsh’s stake in the project under the new entity formed after ExxonMobil’s exit.
Moscow had seized the Sakhalin-I project in Oct 2022 after ExxonMobil’s exit due to Western sanctions, following Russia’s invasion of Ukraine in Feb that year. The rights of investors in the venture were transferred to Rosneft subsidiary Sakhalinmaorneftegaz-shelf and companies were asked to apply for equity afresh. ONGC Videsh’s stake was restored in Dec 2022 conditionally. The abandonment fund is built with revenue contribution in proportion to equity held by each member of the consortium.