ONGC Asked The Russian Federation to Help Formalize Its Participation in The New Operator Sakhalin-1
Indian ONGC is actively working to transfer its share of the assets of the liquidation fund of the Sakhalin-1 PSA project to a new operator (Sakhalin-1 LLC) and has turned to Russia for assistance, Vinod Hallan, chief executive officer for finance of ONGC Videsh Limited, said at a conference with analysts.
“Last week we submitted an application to the Russian Federation to consider the possibility of receiving funds from the liquidation fund (Sakhalin-1, associated with the change of project operator – IF) in rubles. We hope that the decision will be made quickly. We also contacted Commercial Indo LLC Bank” (Russian subsidiary of the largest bank in India, State Bank of India – IF) so that they clarify with the Bank of Russia that we have no restrictions on borrowing in rubles, since the liquidation fund funds that we received from JP Morgan denominated in US dollars. So we are being proactive and hope that the issue can be resolved soon,” he said.
Hallan also noted that ONGC is considering the possibility of using dividends from Vankorneft stuck in Russia – about 16 billion rubles – to fulfill its obligations under the Sakhalin-1 project.
It was previously reported that ONGC is experiencing difficulties in registering its share in the new operator of the Sakhalin-1 project. The Indian company received its share of the project’s liquidation fund on April 6, but was unable to transfer it to Sakhalin-1 LLC due to sanctions imposed on Russian banks and due to Russia’s counter-sanction measures. ONGC noted that it is negotiating with the new project operator about possible alternative ways to transfer assets.
In May, the Indian company’s balance sheet took into account 143.24 billion rupees (at that time – about $1.4 billion) of “deferred investments” in Sakhalin-1.
It was also reported that ONGC was faced with the problem of withdrawing dividends from Vankorneft due to the ownership pattern – the company participates in the project through a structure in Singapore, which is on the list of unfriendly countries approved by the Russian authorities. The funds (11.4 billion rubles for 2022 and 4.5 billion rubles for the first half of 2023) are located in Commercial Indo Bank LLC; restrictions are imposed on their repatriation, so the amount is available for use in the country and currency of receipt.
