The proposal of Putin and Ivanov was accepted

Indian ONGC intends to get 49% in the Sakhalin-3 project

The words of Russian President Vladimir Putin and First Deputy Prime Minister Sergei Ivanov, said recently in Delhi regarding “interest in the participation of Indian capital in the implementation of the Sakhalin-3 project,” did not leave the national gas company ONGC indifferent. Its management announced its intention to obtain a 49% share in this strategic shelf project. “We are interested in receiving the largest share in this project that Russian legislation allows for foreign companies,” the Indian newspaper The Economic Times quotes the press service as saying. However, ONGC may face stiff competition from other foreign companies such as ExxonMobil or China's Sinopec and may either have to scale back its ambitions or find a powerful Russian partner interested in foreign investment. So far, ONGC is working on Sakhalin-1 together with ExxonMobil and Rosneft and owns only a 20 percent share. Therefore, it is possible that she will be able to reach an agreement with the Russian state-owned company.

India imports approximately 95 million tons of oil per year, which accounts for 73% of the country's total hydrocarbon consumption. Therefore, it is increasingly looking for access to large oil and gas projects. ONGC has a long-term plan to purchase oil and gas assets, which expects to increase production by 60 million tons per year by 2025, with a third of the required reserves to be acquired by 2010. In Russia, however, the company’s activities can hardly be called successful. ONGC participates only in Sakhalin-1, and only as one of the minority shareholders. So the Kirinsky block, the development of which is proposed by Sakhalin-3, with reserves of about 720 billion cubic meters of gas and 453 million tons of oil, is of understandable interest to India.

The Ministry of Natural Resources plans to put this project up for auction immediately after the adoption of amendments to the current law “On Subsoil”, limiting the work of foreign companies in Russian fields. At the end of January of this year, Minister of Natural Resources Yuri Trutnev, at a government meeting dedicated to regulating the work of foreign companies in Russia, reported that these amendments were already ready, and proposed to submit them for consideration by the Cabinet of Ministers within a month. After this, they must be approved by the State Duma. Unlike the new law “On Subsoil”, the amendments do not require a six-month period for entry into force. Therefore, the Ministry of Natural Resources assures, Sakhalin-3 may be put up for auction as early as this year. However, applications for participation in it must be accepted three months in advance. Based on this, ONGC must, by October-November this year, agree with any Russian company on the creation of a joint venture, register it and submit an application.

India can most likely reach an agreement in such a short time only with Rosneft, with which it has repeatedly negotiated over the past three years about participation in various production projects, and during Vladimir Putin’s visit to New Delhi, it signed a memorandum of understanding with it. Yesterday, this Russian state-owned company confirmed its interest in Sakhalin-3, but refused to comment on the possibility of joint participation in the auction. However, due to the fact that the signed memorandum resembles the principles of cooperation between a Russian state-owned company and the Chinese CNPC, it is reasonable to assume that the terms of work with ONGC will be the same as with the Chinese within the framework of the Udmurtneft project: control over the enterprise belongs to Rosneft, financing is fully lies with the foreign company, with which the Russian company pays with its share of the extracted resources.

Anna GORSHKOVA