Thursday, Nov 25, 2004
ONGC Videsh to invest more in Russian oil field
By Our Special Correspondent
NEW DELHI, NOV. 24. The Government today approved an additional investment of $1.07 billion by ONGC Videsh Limited (OVL) in the giant Sakhalin-I oil and gas field in Russia. This will be over and above the $1.7 billion already cleared for investment in this major offshore oil project. The other partners of OVL in Sakhalin-I include the oil major, ExxonMobil, the Russian national companies, Rosneft and SMNG-S, and a consortium of Japanese companies, Sodeco. The decision to approve the higher investment was taken here today at a meeting of the Cabinet Committee on Economic Affairs (CCEA).
Briefing newspersons after the meeting, the Union Finance Minister, P. Chidambaram, said OVL now had a 20 per cent stake in the Sakhalin-I project. The additional amount of $1.07 billion would include about $503 million towards 'carry loan' to Russian parties in the production sharing agreement (PSA). The CCEA has also directed OVL to take all necessary steps to ensure that all costs including the increased estimates now approved are cost recoverable under the PSA.
"The additional investment in the project will help in acquiring equity oil abroad and will help in increasing oil security for the country,'' an official release says. OVL, the overseas subsidiary of the Oil and Natural Gas Corporation (ONGC), will raise the additional money from its own resources.
OVL acquired 20 per cent participating interest in the Sakhalin-I project from two subsidiaries of the Russian government oil companies, Rosneft-SMNG-S and Rosneft-S in July 2001. ExxonMobil has 30 per cent equity stake in the project, while Rosneft and SMNG-S have 20 per cent sake and Sodeco holds 30 per cent. ExxonMobil is the project operator.
Natural gas production from Sakhalin-I is expected to begin from the third quarter of 2005 while crude oil production from the offshore fields will commence from January 2006.
Regulatory Board
The Cabinet referred other pending decisions in the hydrocarbons sector to two separate Groups of Ministers. The long waited move to set up a Petroleum Regulatory Board as well as the issue of raising natural gas prices have been referred to GOMs, according to official sources.
Copyright © 2004, The Hindu.