ONGC Videsh has around $100 mn of dividend income stuck in Russia: Official

Leading Indian offshore company ONGC Videsh has less than $100 million in dividend income in Russia due to the conflict in Ukraine, but the company is in no rush to return it, a senior official said on Monday.

Indian state oil companies have invested $5.46 billion in buying stakes in four different assets in Russia. These include a 49.9 percent stake in the Vankorneft oil and gas field and another 29.9 percent in the TAAS-Yuryakh Neftegazodobycha fields.

They receive dividends on the operating consortium’s profits from the sale of oil and gas produced from the fields. Shortly after invading Ukraine in February last year, Russia placed restrictions on bringing dollars home to check fluctuations in foreign exchange rates.

OVL, the offshore arm of the state-owned oil and natural gas company (ONGC), received its last dividend in July 2022. One payment came next into the company’s account in Russia.

The company’s managing director, Rajarshi Gupta, said the dividend income located in Russia is “less than US$100 million”.

“We are not in a hurry to get it back because the company has capital and operational expenditures for the three projects in Russia,” he said. “It’s business as usual as far as dividends are concerned.”

OVL has an interest in Russia through a subsidiary in Singapore.

Moscow declared Singapore an unfriendly country last year, and therefore money cannot flow from Russia to any company registered in that country.

He said the company is looking into the right banking channels and discussions are ongoing. Last week, Oil India officials said $300 million of the company and its partners’ profits were stuck in Russia.

The OIL consortium, Indian Oil Corporation (IOC) and Bharat PetroResources Ltd have stakes in two ventures.

The dividend of US$300 million was due to the Commercial Bank of India LLC (CIBL), which was a joint venture between State Bank of India and Canara Bank. Canara Bank in March sold its 40 per cent stake in CIBL to SBI.

TAAS’s dividends were paid out on a quarterly basis, while Vankorneft’s dividends were paid semi-annually. He said Indian companies are looking at options on how to get money back from Russia.

OVL owns a 26 percent stake in the Suzunskoye, Tagulskoye and Lodochnoye fields – collectively known as the Vankor Group in the northeastern part of Western Siberia.

Indian Oil Corp (IOC), Oil India Ltd (OIL) and Bharat PetroResources Ltd (a unit of Bharat Petroleum Corp Ltd or BPCL) own another 23.9 percent stake in Vankor. Russia’s Rosneft is the operator with a 50.1 percent stake.

A consortium of OIL, IOC and Bharat PetroResources holds a 29.9 percent stake in TAAS-Yuryakh Neftegazodobycha. Field operations have not been affected and production continues as normal.

OVL also owns a 20 percent stake in the Sakhalin-1 oil and gas field in far eastern Russia, and in 2009 acquired Imperial Energy, which owns fields in Siberia, for US$2.1 billion.

OVL, which owns 32 oil and gas properties in 15 countries from Venezuela to Vietnam, saw oil production fall to 6.349 million tons in the 2022-23 fiscal year (April 2022 to March 2023) from 8.099 million tons a year earlier.

Gas production also fell to 3.822 bcm from 4.231 bcm in 2021-22. The drop in production was due to the cessation of operations at Sakhalin-1 for seven months after operator Exxon declared force majeure after the Ukraine war.

But higher oil prices are helping it to record a net profit of Rs. 1,700 crore in FY23 against VAT of Rs. 1,589 crore in the previous financial year.