OVL’s wait for dividend from Sakhalin-1 oil field lengthens
New Delhi: With state-run ONGC Videsh Ltd (OVL) yet to get equity rights for its shares in Russian energy project Sakhalin-1, the overseas arm of Oil and Natural Gas Corp. has not received any dividend payments, two people aware of the development said. The project is India’s most lucrative energy equity investment overseas and has been a significant source of returns for ONGC since its acquisition in 2001.
However, despite efforts to address the issue with Rosneft and at various levels of the Russian government, a resolution has not yet been reached. OVL purchased the stake for around $331 million, and the investment has since yielded significant gains in the form of equity oil. Rosneft, on its part, has invested nearly $13 billion in India. Mint reported on 21 April about Rosneft offering dividend payments to OVL for its 20% stake in Sakhalin-1 instead of lucrative equity oil for India.
Following Russia’s invasion of Ukraine, Moscow took control of Sakhalin-1 through a presidential decree in October and transferred it to Rosneft subsidiary, Sakhalinmorneftegaz-shelf. Consequently, ExxonMobil, the operator, exited Russia. ExxonMobil had a 30% stake in the asset spread over 1,140 square km, while Japan’s Sakhalin Oil and Gas Development Co.
held 30%, and Rosneft units held 20%. Post the Russian presidential decree, while OVL received its previous shareholding in Sakhalin-1, the shares are yet to be transferred to it. In the absence of ownership of the shares, OVL is not getting dividend payments.
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