The Cabinet has approved the merger of ONGC’s Russian assets with Sistema-promoted Bashneft and RussNeft in a deal that will give the Indian company access to Trebs & Titov oilfields, boost profitability of its Imperial Energy and give it a 25% stake in the merged entity. The approval has come weeks before the June 30 deadline set by two parties to conclude terms of the deal. ONGC is demanding tax breaks for its project Sakhalin-I and its recent acquisition, Imperial Energy.
ONGC’s foreign arm bought Imperial Energy in 2009 for $2.1 billion but it was not able to generate a decent profit due to exorbitant taxes. The merger will give ONGC a quarter share in Russian firm’s annual oil production of 25 million tonne besides partnerships in their refineries totaling 20 MT capacity. The deal will also gain ONGC an immediate access to the biggest discovered oilfields in Russia, Trebs and Titov, which India was eyeing for a long time.
The fields have estimated 200 MT recoverable reserves, equivalent to 35% of ONGC’s total crude oil reserves. The deal is significant for India, which imports over 70% its oil and gas consumption. The deal, which does not involve any cash transaction, was announced in December 21, 2010.
Sistema has a 75% direct stake in Bashneft that produces 13 MT of oil from fields in Russia. It also owns refineries with a combined capacity of 20 MT. It has a 49% stake in RussNeft that producing 12 MT of oil. Officials in the oil ministry say that state-run Indian Oil Corp, the country’s largest refiner, may also join ONGC in the venture.
| Company Name | CMP |
|---|---|
| ONGC | 244.35 |
| Oil India | 445.05 |
| Jindal Drilling&Inds | 745.70 |
| Hind Oil Exploration | 194.15 |
| Deep Industries | 614.05 |
| View more.. | |
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