India’s ONGC Videsh has submitted an application to Russian authorities to retake a 20% stake in the Sakhalin 1 oil and gas development project near Sakhalin Island in the far east of the country, according to a report by Reuters.
ONGC Videsh is an overseas investment vehicle of India’s Oil and Natural Gas Corp.
The company had held a stake of 20% in Sakhalin 1 until October, when authorities moved to confiscate the project from its previous operator, Exxon Neftegaz, and pass it to a newly created, Russian-registered entity simply called Sakhalin 1.
Moscow has assigned a 20% stake in Sakhalin 1 and operatorship to a regional subsidiary of Russian oil producer Rosneft, but said that foreign shareholders in the project — ExxonMobil, Sodeco and ONGC Videsh — will have to apply to Moscow to reinstate their shareholdings in the project before mid-November.
Japan’s Sodeco consortium took its own decision to retain its stake in the project last week when Japan’s authorities endorsed a similar application from Sodeco to retake a 30% share in Sakhalin 1, describing the project as important to the country’s energy needs.
However, ExxonMobil confirmed that it had fully exited Sakhalin 1 after the confiscation of assets and has no plans to operate the project.
According to Russian customs statistics, ONGC Videsh was lifting cargoes of Sakhalin's Sokol blend crude, based on its share of production from Russian far eastern marine terminal De-Kastri just before Exxon Neftegaz had to halt shipments in May.
Sakhalin 1 produced oil at the rate of about 250,000 barrels per day last year, with ONGC Videsh entitled to a guaranteed allocation of at least 50,000 bpd.
Reports in Moscow said that international insurers stopped providing coverage for a fleet of ice-class tankers that served Sakhalin 1 to comply with international sanctions against the country and its corporations.
The tankers are operated by Russian state shipper Sovcomflot.
Sakhalin Island authorities and Rosneft have remained silent about restoring production at Sakhalin 1 following the halt in May and the exit of ExxonMobil and a team of foreign executives from the project.
Marine traffic services had indicated no loading at the De-Kastri terminal as of Tuesday, although two tankers, understood to be operated by a United Arab Emirates subsidiary of Sovcomflot, have been seen anchored near the terminal since October.
Following the expected approval of the Sodeco and ONGC Videsh applications later this month, authorities have four months to conduct an audit of Sakhalin 1 and decide whether to auction the 30% share previously held by ExxonMobil, according to an earlier governmental resolution on the matter.
- Equinor completes Russian exit… but fellow Western majors face more hurdles
- Russian court hamstrings Shell in oil venture
- Kremlin-backed operator takes full control of Sakhalin 2 LNG project
- ExxonMobil closer to completing Sakhalin 1 exit
- Russia's Sakhalin 1 project sees three-fold decline in oil production