ONGC: Multiple Gains From Russian Oil Deal
Oil and Natural Gas Corporation (ONGC)’s buyout of a 15 per cent stake in the Vankorneft Oil project in Russia has received a thumbs-up from most analysts, as there are clear benefits. The deal will enable ONGC’s overseas subsidiary, ONGC Videsh (OVL) to source 66,000 barrels of oil from Vankorneft daily or three million tonnes (mt) annually. Vankorneft is a subsidiary of Russian oil giant Rosneft. Analysts believe output from this project could provide a third of OVL’s production and say the deal valuation, estimated to be between $1.27 billion and $1.35 billion, are also inexpensive. “The deal value of 15 per cent stake is $2.46/ barrel of oil equivalent, lower than OVL & Oil India’s deal with Videocon’s 10 per cent stake at $2.97/ barrel of oil equivalent and CNPC (China National Petroleum Corp)-ENI deal at $2.8/ barrel of oil equivalent in Mozambique,” say analysts at India Nivesh Research.