New Delhi : OIL-IOC-BCPL combine’s $2.02 billion deal to acquire 23.9% stake in Russia’s Vankor oilfield has spoilt ONGC Videsh’s chance of negotiating down the price for additional 11% it is buying in the same field.
OVL, the overseas arm of state-owned Oil and Natural Gas Corp (ONGC), had in September last year bought 15% stake in Russia’s second biggest oilfield of Vankor for $1.268 billion.
In March this year, Rosneft agreed to sell another 11% to OVL. Simultaneously, it struck a deal to sell 23.9% in Vankor to a consortium of Oil India (OIL), Indian Oil Corp (IOC) and a unit of Bharat Petroleum Corp (BPCL).
Sources said the board of OVL wanted the price of the additional 11% stake to be renegotiated downwards.
Going by the September 2015 agreement, OVL would have to pay about $930 million for the additional stake. But the company board was of the opinion that since it was picking up a sizeable stake in the field operated by US-sanctioned company, the asking price has to be renegotiated.
But as OVL sought renegotiations, the OIL-IOC-BPCL consortium last month signed definitive agreements for buying 23.9% stake in Vankor for $2.02 billion.
OIL-IOC-BPCL consortium has also agreed to pay interest to Rosneft till such time the deal is closed and all payments made, which is likely by September 30.
Sources said Rosneft is now arguing that when the buyer of larger 23.9% stake is willing to pay a price in line with the September 2015 deal, there remains no scope for negotiating it with a buyer who is picking up less than half, about 11%.
After all deals close, Indian state firms will have 49.9% stake in Vankor, entitling them to 220,000 barrels per day (11 million tonnes a year) of oil production.
Vankor field, located in East Siberia, is Russia’s second largest field by production and accounts for around 4% of Russian production and currently producing about 422,000 barrels of oil per day.