The Hindu Business Line : Deora to press for stake in Sakhalin-III project

Energy security measure
May pitch for an agreement between OVL and Russia's major Rosneft for a joint bidding in Sakhalin-III project
May push for a pact to convert Sakhalin-I gas into liquefied natural gas for shipping back home

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New Delhi Jan. 24 India, which is on a lookout to diversify its petroleum sourcing as a wider energy security measure, is keen to seek a stake in Sakhalin-III project off Russia's Far East coast.

The Petroleum Minister, Mr Murli Deora, said India would ask Russia for a stake in its Sakhalin-III project during the visit of Russian President, Mr Vladimir Putin.

During his two-day visit starting Thursday, he is expected to hold wide-ranging discussions on defence and energy cooperation.

India imports 73 per cent of its oil and gas requirement. ``At the meeting on Thursday we are going to ask for some share in Sakhalin-III,'' Mr Deora told media persons at the sidelines of the function to inaugurate the IGL Bhawan here. The Minister, however, did not indicate the quantum of the stake he will bargain for.

``We are very keen on extending the Sakhalin-I partnership and hope Mr Putin will oblige us,'' he said.

OVL stake

ONGC Videsh Ltd (OVL), the overseas arm of state-owned ONGC has a presence in Sakhalin-I project. It owns a 20 per cent stake in the Sakhalin-I oil and gas project, which is operated by Exxon Mobil Corp. The country's state-run oil and gas exploration companies have been seeking energy assets abroad in a bid to secure a hedge against rising crude prices. OVL's 20 per cent stake in Sakhalin-I field fetched the country 2.4 million tonnes of crude per annum.

Sakhalin-I and II projects have been decided and Russia plans to invite bids in future for Sakhalin-III, IV, V and VI projects. Indications are that India would pitch for an agreement between OVL and Russia's major Rosneft for a joint bidding in Sakhalin-III project. Also in focus are the Trebs and Titov exploration blocks in Timan Pechora region, for which a partnership with Rosneft will be sought.

India also wants OVL to form a 49:51 joint venture with either Rosneft or Gazprom to pursue other oil and gas exploration opportunities in Russia. The company would also seek an agreement with Rosneft for the development of the Vankor field, in which the Russian firm is scouting for new partners, and a stake in the Kurmangazy field.

As regards plans to convert Sakhalin-I gas into liquefied natural gas (LNG) for shipping back home, indications are that India would push for an agreement on the issue. Since OVL's plea for utilising Sakhalin-I gas for an LNG project has not been heeded so far, the country is likely to push for some of the pending deals during the Russian President's visit.

``I will try my best to impress Mr Putin on the issue when I meet him tomorrow afternoon,'' Mr Deora added.

Oil Bonds

On the domestic front, Mr Deora hoped that there would be no need for further issueof oil bonds to state-run oil retailing companies as global crude prices have softened.

When asked whether any more bonds would be needed, he said: ``I hope not.''

The Government issued oil bonds to state-owned oil marketing companies to partially offset the under recoveries suffered by them for selling the petroleum products below the cost price.

The Indian crude basket after hitting the lowest since April 2006 on January 17 at $49.85 a barrel moved up to $51.80 a barrel on January 23. The average for January to date (January 23) stood at $52.16 per barrel, and the average for April 2006 to date (January 23) stood at $63.49 a barrel.

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