India's Vostok Plan Slows As US Cos Skip Sanctions-Hit Russia

(MENAFN- Live Mint) "India's plans to invest in a massive Rosneft project in Vostok have stalled as American consultants who conduct third-party studies and due diligence stay off the sanctions-hit Russian Federation, two officials aware of the development said November 2021, Mint reported about a consortium of state-run firms-ONGC Videsh Ltd (OVL), Indian Oil Corp. Ltd (IOCL) and Oil India Ltd (OIL)-completing the technical evaluation of 30 out of 52 licence areas of the Vostok project. India is also looking to invest in Russia's liquefied natural gas (LNG) project, Arctic LNG-2, by purchasing a stake from Novatek. The transactions hold importance for India, the world's third-largest oil buyer an estimated reserve of about 6 billion tonnes of crude oil and expected production of 100 million tonnes (mt) in 2030, Vostok is part of a multi-pronged energy partnership between India and Russia. It is the largest greenfield oil and gas project in the world and comprises 52 licence areas with 13 oil and gas fields, including Vankor, Suzunskoye, Tagulskoye, Lodochnoye, Payakhskoye and Zapadno-Irkinskoye.“We have been exploring investing in other assets in Russia, but there are problems on account of the unavailability of consultants to do due diligence there. Most of the consultants who do third-party studies are US-based,” said one of the two people on condition of anonymity.A top government official said:“These are discussions going on for a long time. Whenever you want to register forward movement on these transactions, you need, first of all, a valuation. We have done a fair amount of acquisitions over the years. They will increase going ahead. But, whenever a country is in a war-like situation, the transactions become more difficult. For us, it is a good thing now that if we are getting a good asset somewhere, we should buy it anywhere in the world.”Indian state-owned firms have invested $16 billion in Russia, including in the Far East and East Siberia, in oil and gas assets such as Sakhalin-1, Vankor and Taas-Yuryakh. While OVL owns a 20% stake in the Sakhalin-1 hydrocarbon block, a consortium of OVL, OIL, IOCL and Bharat PetroResources Ltd owns 49.9% in Rosneft's unit CSJC Vankorneft consortium comprising OIL, IOCL and Bharat PetroResources owns 29.9% of LLC Taas-Yuryakh, the repatriation of around $600 million in dividends stuck in Russia due to Western sanctions on Russian energy companies remains a challenge. On 10 September, Mint reported that OIL hired legal and tax consultants to explore ways to repatriate its $150 million in dividends stuck in Russia, the US treasury department's Office of Foreign Assets Control (OFAC) has sought details of Russian oil purchases, including those by Indian entities, in the last few months emailed to spokespeople for Rosneft, OVL, IOCL, OIL, and India's petroleum and natural gas ministry on 17 August remained unanswered has emerged as the largest supplier of oil to India in the past 20 months with offers of discounted oil amid sanctions from the West in reprisal for its invasion of Ukraine. Russia continued to be the largest oil supplier to India in August, with imports worth $4.15 billion, according to data from the commerce ministry. In FY22, Russian oil accounted for only 2% of India's total oil imports; in FY23, it made up around one-fourth of the 235.52 million tonnes of crude oil imported by India. It now stands at 39%.

MENAFN26102023007365015876ID1107315045