ONGC Finalized the Acquisition of a Stake in the Operator of the Sakhalin-1 Project
The Indian company Oil and Natural Gas Corporation (ONGC) has successfully completed the transfer of funds to the decommissioning fund of the Sakhalin-1 project in order to retain its 20% stake in the project. This was announced during a conference call with analysts by the Managing Director of ONGC Videsh Ltd (OVL), Rajarshi Gupta.
“Our stake in the Sakhalin-1 project has been secured, and we are participating in the project; production and operations are proceeding as usual,” he said.
ONGC’s Chief Financial Officer, Kivek Tongaonkar, also expressed hope for the early receipt of part of the project’s dividends: “We continue to move forward with the support of the Russian and Indian governments. We have been informed that our equity stake in this company has been secured, which is a very positive step from the perspective of ONGC OVL. And we hope that during the next year (the financial year in India begins in April) we will be able to receive part of our pending dividends and so on.”
According to ONGC’s published report for the third quarter of the financial year, in December 2025 the company received its stake in the Production Sharing Agreement project: “In accordance with the Decree of the President of the Russian Federation dated 1 September 2025, permitting the transfer of funds intended for enterprise liquidation in rubles, OVL completed the transfer of funds to LLC Sakhalin-1, including accrued interest, on 3 December 2025, using borrowed funds from VIPL (a Singapore joint venture) and accumulated dividends (including interest on bank deposits) held in the group’s bank accounts in Moscow. Upon receipt of shares in LLC Sakhalin-1 on 5 December 2025, the carrying value of the investment as of 31 December 2025 amounted to 15,814 crore rupees (1.759 billion US dollars) and was recorded as ‘Investment in an Associate Company.’”
It is noted that OVL has not yet recognized profit from the project in its report, as it has not received the financial statements of LLC Sakhalin-1 (annual reporting of Russian companies is expected in March–April).
Access to information about the founders of LLC Sakhalin-1 in the Unified State Register of Legal Entities is restricted; however, on 5 December 2025, a third entry appeared in the section “Information on Participants / Founders of a Legal Entity.” As previously reported, upon establishment of the new operator of the Production Sharing Agreement project, only Russian companies immediately received their stakes — JSC Sakhalinmorneftegaz-Shelf (11.5%) and JSC RN-Astra (8.5%). Foreign participants were required to confirm their consent to receive a proportional stake in the new operator, which was done by ONGC (20%) and the Japanese company SODECO (30%). Exxon Mobil (30%) announced the termination of its participation in the Production Sharing Agreement project and its complete withdrawal from Russia.
ONGC experienced difficulties in formalizing its stake in the new operator of the Sakhalin-1 project due to sanctions imposed on Russian banks and Russia’s counter-sanctions measures. Numerous Western sanctions complicated ONGC Videsh’s transfer of funds to Russia in US dollars, and payments in rubles require approval from Russian authorities.
As reported, in August 2025, President of the Russian Federation Vladimir Putin, by decree, supplemented the list of requirements for foreign participants in the project.
In particular, a foreign participant in the consortium must conclude supply contracts for foreign-manufactured equipment and spare parts necessary for the implementation of the Production Sharing Agreement, as well as agreements on technical cooperation.
Another condition is the “undertaking by the foreign party of the consortium of actions that led to the lifting of political and economic sanctions imposed by foreign states that negatively affect the execution of the Production Sharing Agreement, including, if necessary, their judicial appeal.”
In addition, the applicant must independently or through other parties credit to the decommissioning account of LLC Sakhalin-1 an amount equal to the funds previously accumulated by that participant in the Production Sharing Agreement decommissioning fund (a fund intended for subsequent elimination of operational consequences).
Sakhalin-1 includes three oil and gas fields: Chayvo, Odoptu, and Arkutun-Dagi, located on the north-eastern shelf of the peninsula. Total reserves are estimated at 307 million tonnes of oil and 485 billion cubic meters of natural gas. The consortium reached peak oil production at Sakhalin-1 in 2019 (12.96 million tonnes per year), after which output began to decline. In 2020, production amounted to 12.44 million tonnes, and in 2021 — 11.3 million tonnes. Exact data on oil production volumes at the project in 2022–2024 have not been published.
