The Hindu Business Line : ONGC, Rosneft ink energy cooperation pact

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New Delhi Jan. 25 Oil and Natural Gas Corporation (ONGC) and Rosneft Oil Company of Russia have agreed to expand mutual cooperation in the energy sector.

Encouraged by the positive partnership in the Sakhalin-I project, Rosneft and ONGC on Thursday decided to expand their relationship in other projects in Russia, India and third countries.

An MoU to this effect was signed by Mr R.S. Sharma, Chairman and Managing Director, ONGC, and Mr Sergey Bogdanchikov, President of Rosneft, who has accompanied the Russian President, Mr Vladimir Putin, on a two-day visit to India. ONGC Videsh Ltd (OVL), the overseas arm of ONGC, and Rosneft are partners in the Sakhalin-1 oilfield, operated by the US oil major ExxonMobil.

MoU

OVL's 20 per cent stake in Sakhalin-I field fetched the country 2.4 million tonne of crude per annum. This MoU in effect could mean that OVL and Rosneft may combine forces for a joint bid to acquire a stake in the Sakhalin-III field as and when it is auctioned. Industry sources do not rule out a possibility of similar tie-ups between the Indian state-owned company and other Russian firms such as Gazprom.

Joint exploration

As per the MoU, Rosneft and ONGC would jointly study the possibilities for mutual projects in exploration, production and marketing as well as other projects related to the hydrocarbon industry, including joint bidding for oil and gas stakes in Russia, India and third countries.

The two companies also agreed to jointly explore the options for participation in refining and retail marketing projects in India, including integration of other companies in India, a statement issued by ONGC said.

Study groups

To implement this MoU, Rosneft and ONGC will establish two joint study groups, one of which will be responsible for upstream and the other for downstream. Upon jointly identifying a project, the parties shall mutually decide on the structure of the joint venture to implement the identified project, the statement said.

ONGC will conduct the activities under this MoU in Russia and third countries through OVL. The Rosneft President said, "it would be ideal to match the growing Russian production with the growing Indian market through dedicated joint ventures."

ONGC has a market capitalisation of $43 billion while Rosneft has a market capitalisation of approximately $100 billion. OVL is currently engaged in 15 countries with 25 projects and 40 blocks.