The issue of India’s most lucrative energy equity buy overseas has been raised with Rosneft and at various levels in the Russian government but is yet to be resolved. The stake sale was purchased ONGC’s subsidiary for $331 million in 2001 that has yielded manifold returns. Rosneft on its part has invested around $13 billion in India.

Mint reported on 21 April about Russia’s Rosneft offering dividend payments to OVL as against its 20% stake in Sakhalin-1, which was earlier the source of lucrative equity oil for India. Following Russia’s invasion of Ukraine, Moscow seized the Sakhalin-1 asset through a presidential decree in October last year and gave it to Rosneft subsidiary —Sakhalinmorneftegaz-shelf— resulting in ExxonMobil, the operator of the asset exiting Russia. ExxonMobil owned a 30% stake in the asset spread over 1140 square km, Japan’s Sakhalin Oil and Gas Development Co. held 30% in the project, with Rosneft units holding the remaining 20%. Post the Russian presidential decree, while OVL received its previous shareholding in Sakhalin-1, the shares are yet to be transferred to it. In the absence of share’ ownership, OVL is not getting the dividend.

“While we earlier used to get equity oil for our stake in Sakhalin-1, we were offered dividends. Given that our share has not been transferred back to us, presently we are neither getting dividend, nor any equity energy from there,” said one of the two people cited above requesting anonymity.

Queries emailed to the spokespersons of Rosneft, Russian Federation embassy in New Delhi, India’s ministries of external affairs, and petroleum and natural gas, and OVL on 18 July remained unanswered till press time.

Also, Indian state-run energy firms including OVL, Bharat Petroresources Ltd, Indian Oil Corp, and Oil India Ltd face approximately $400 million in dividend payments from from CSJC Vankorneft and LLC Taas-Yuryakh stuck in Russia given the difficulty in transferring dividend payments from Russia, as reported by Mint earlier.

A Rosneft spokesperson in an earlier 19 April response said, “In early October, in accordance with the presidential decree, a new Russian legal entity was created to manage the asset and resume full-scale operations in accordance with Russian law. At the same time, the opportunity was preserved for all existing shareholders to participate in the new project in proportion to their pre-existing interests in the Sakhalin-1 project. The only condition for continued participation was the formation of a liquidation fund for the project in the Russian Federation, previously organized by Exxon in Great Britain. The Indian partners have not fulfilled this condition for the time being.”

The discount on Russian crude oil supplies to Indian refiners has also been dwindling. Russia emerged as a major supplier to Indian refiners for the first time in FY23 after it started giving oil at discounted rates amid the Ukraine war. India is a key Asian refining hub, with an installed capacity of more than 249.36 million tonnes per annum (mtpa) through 23 refineries. It has 23 refineries and plans to grow its refining capacity to 400 mtpa by 2025. Large Indian refiners include Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL), Hindustan Petroleum Corporation Ltd (HPCL), Nayara Energy Ltd (formerly Essar Oil) and Reliance Industries Ltd. India’s import of crude oil and petroleum products rose 29.5% to $209.57 billion in FY23.

Updated: 21 Jul 2023, 11:55 PM IST