ONGC Videsh Eyes Banking Channel Breakthrough to Recover $350 Million Stuck in Russia
India’s flagship overseas firm ONGC Videsh is hopeful that the opening of banking channels with Russia and a sanctions waiver on Venezuelan oil will allow it to recover pending dues in both countries, a senior official said on Friday.
Background: ONGC Videsh’s Investments in Russia and Venezuela
ONGC Videsh, the overseas investment arm of state-owned Oil and Natural Gas Corporation, has invested heavily in oil and gas assets in Russia and Venezuela. The company has a significant stake in several oil and gas fields in Russia, including a 49.9% stake in the Vankorneft oil and gas field and another 29.9% in the TAAS-Yuryakh Neftegazodobycha fields.
Challenges Faced by ONGC Videsh in Recovering Dues
The company has about $350 million in dividend income stuck in Russian banks that it can’t repatriate because of western embargo. Additionally, ONGC Videsh has another $600 million stuck in Venezuela due to sanctions. The firm’s managing director, Rajarshi Gupta, said that the company is looking at the right banking channels and discussions are on to recover the pending dues.
Indian State Oil Firms’ Investments in Russia
Indian state oil firms have invested $5.46 billion in buying stakes in four different assets in Russia. These include a 49.9% stake in the Vankorneft oil and gas field and another 29.9% in the TAAS-Yuryakh Neftegazodobycha fields. The companies get dividends on profits made by the operating consortium from selling oil and gas produced from the fields.
Impact of Sanctions on ONGC Videsh’s Operations
Soon after invading Ukraine in February 2022, Russia put restrictions on repatriation of dollars to check volatility in foreign exchange rates. ONGC Videsh got its last dividend back in July 2022, and subsequent dividend payout is lying in the company’s account in Russia. The company’s assets in Russia are operating without any problem, and considering the operating and capital expenditure that the company may have on the Russian assets, $350 million is not much.
ONGC Videsh’s Holdings in Russia and Venezuela
ONGC Videsh holds interest in Russia through a Singapore subsidiary. However, Moscow declared Singapore as an unfriendly nation last year, and so money from Russia cannot flow to any company incorporated in that country. The company holds a 26% stake in Suzunskoye, Tagulskoye, and Lodochnoye fields — collectively known as the Vankor cluster in the north-eastern part of West Siberia.
ONGC Chairman’s Statement on Buying Russian Oil
ONGC chairman and managing director Arun Kumar Singh said that his group will continue to buy Russian oil till such time that it is available at economical prices and it makes commercial sense for refineries to process it. The company has two refining subsidiaries, Mangalore Refinery and Petrochemicals Ltd. and Hindustan Petroleum Corporation Ltd, both of which have bought Russian oil that was available at a discount since the start of the Ukraine war.
Conclusion: ONGC Videsh’s Recovery Efforts
ONGC Videsh is hopeful of recovering the pending dues in Russia and Venezuela, and the company is exploring all possible options to achieve this. The opening of banking channels with Russia and a sanctions waiver on Venezuelan oil are expected to facilitate the recovery process. Indian investors and traders can expect positive developments in the coming days, and it is essential to stay updated on the latest news and developments in the oil and gas sector.
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