India’s state-run Oil and Natural Gas Corp (ONGC) is keen on receiving a share of crude from a Russian project that it partly owns. However, ONGC is willing to wait due to the difficulties in shipping Russian oil at the moment. ONGC Videsh, the overseas investment arm of ONGC, has regained its 20% stake in the Sakhalin-1 oil and gas project after Russian President Vladimir Putin removed Exxon Mobil as the operator. The company is now in talks with Russian government officials and other project shareholders to resume taking oil under a production-sharing arrangement.
Rajarshi Gupta, CEO of ONGC Videsh, explained that the current restrictions on shipping Russian oil make it challenging to transport and market the crude. Insurance and shipping for Russian oil are hard to secure, and shipments must adhere to an international price cap. Gupta stated that if someone else can handle the oil for now, he is okay with waiting for the situation to improve.
The discussions with Russia and other stakeholders are expected to take about six months to conclude. Sakhalin-1 currently produces approximately 200,000 barrels of oil per day and involves shareholders such as Japan’s Sodeco and Russia’s Rosneft.
Gupta mentioned that while ONGC has investments in three Russian projects, the company is not actively seeking any further investments in Russia at the moment. The ongoing conflict between Russia and Ukraine has created uncertainties, and there is a need for more clarity before proceeding with additional investments.
ONGC, as India’s top explorer, plays a vital role in the country’s oil and gas industry, accounting for about two-thirds of India’s oil production and a significant portion of its gas output. India heavily relies on imports for its oil and gas needs.
Source: Reuters (Rod Nickel)