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Commercial differences between Russia’s Rosneft and India’s ONGC Videsh Ltd took away much of the sheen from the slew of agreements announced during Russian President Vladimir Putin’s visit to New Delhi on December 11.
The two firms failed to seal a deal because of divergent expectations from the venture.
Officials privy to the development said the differences cropped up because Russia’s proposal of a stake in the Vankor oilfields — the largest field to be brought into production in Russia in the last 25 years — did not mean the Indian company would get a share of the output.
“India needs oil and gas. Why will an investment be made if a company does not get its share of oil and gas from the fields?” an official told BusinessLine .
While sources did not disclose the exact deal size, it is expected to be around $2 billion.
Russia has been wooing old partners like India following sanctions by the West over the Ukraine crisis.
Vankor oilfieldsIn Russia, assets are carved out into special purpose vehicles or companies.
The Vankor oilfields are operated by Vankorneft, a subsidiary of Rosneft.
The field is located in the northern part of Eastern Siberia. As of January 1, the initial recoverable reserves in the Vankor field are put at 500 million tonnes of oil and condensate, and 182 billion cubic metres of gas (natural and dissolved).
What is being offered is a stake in the subsidiary, another official explained, adding that if the Indian firm’s stake is less than 25 per cent, it does not qualify to claim equity on the produce.
However, the official maintained that “talks between the two companies are going on. The two would like to resolve the issues. But economic terms have to be prioritised. Besides, only when the issue of equity in produce is resolved does the question of stake arise.”
On December 10, an OVL official had told BusinessLine that “discussions were still going on, and a final call will be taken subsequently.”
Russia has also offered OVL a proposal to undertake joint development of the Yurubcheno-Tokhomskoye oilfield in eastern Siberia.
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