Indian ONGC may pay Rosneft $900 million for a share in Vankorneft, reported Bloomberg citing two sources. Rosneft plans to sell 10% of Vankorneft to ONGC, wrote TASS referring to the sources.
ONGC’s interest in in Vankorneft and the Yurubcheno-Tokhomskoe deposit was confirmed by Indian officials. ONGC Videsh Ltd may buy a share, which is operating overseas. ONGC wants to sign the contract in early September, writes Bloomberg. Rosneft and ONGC representatives have not commented.
News that the Indian company might purchase a share of Rosneft’s Vankorskoe deposit came out in mid-December 2014. Then, an Indian government official was cited in the Press Trust of India and The Economic Times, saying that a deal may take place at the end of 2014. Reserves at the Vankorskoe deposit in eastern Siberia are thought to be 500 million tons of oil and condensate, and 182 billion cubic meters of gas. Last year 22 million tons of gas were extracted from the site. From the Rosneft group, in terms of extraction volume Vankorneft is exceeded only by Yuganskneftegaz and Samotlorneftegaz, but in 2015 it may exceed Samotlor field where extraction is dropping, says Raiffeisenbank analyst Andrey Polischuk.
Vankorneft is also the operator for the Lodochnoe, Suzunskoe and Tagulskoe deposits (where extraction currently is not being undertaken), which are part of the Vankorskoe cluster. It’s total reserves comprise 850 million tons. By 2025, Rosneft plans to extract 44 million tons a year at the Vankorskoe deposits, commented Polischuk. Analysts from Morgan Stanley evaluate the entire project at being worth $11.6-14 billlion. So 10% could cost $1.2-1.4 billion.
The deal between Rosneft and ONGC could become drawn out due to discussions on the details, how much the Indian company will invest, and what fields in the Vankorskoe deposit will be included in the deal, believes Polischuk. Furthermore, the oil price has dropped, although that is unlikely to be reflected in the cost of the Vankorneft packet, the project is long term with peak oil only being reached in 2025, he observed.
Rosneft’s second foreign partner for the Vankorskoe deposit might be CNPC – an agreement was signed by the companies last autumn at the APEC summit. A CNPC representative told Interfax at the time that the company could purchase more than a 10% share, but that was the packet that Rosneft was able to offer. Foreign interest in the Vankorskoe field is understandable: traditionally Russian deposits are among the most efficient in the world, said Polischuk.
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