29 May 2023 16:31

ONGC continuing to set up participation in new Sakhalin-1 operator after departure of Exxon

MOSCOW. May 29 (Interfax) - India's ONGC is having trouble formalizing its stake in the new operator of the Sakhalin-1 project, the company said in its annual report.

It received its share of the project's liquidation fund (due to the transition of the project operator to a Russian legal entity) on April 6.

The Indian company is now "in the process of completing the transfer of its share of the liquidation fund" to the limited liability company Sakhalin-1, and due to the sanctions imposed on Russian banks, is negotiating with the new operator of the project on possible alternative ways of transferring assets.

The company's balance sheet currently accounts for 143.24 billion rupees (about $1.4 billion) of "deferred investments" in Sakhalin-1.

ONGC estimated at $926 million the potential amount of redemption of 20% of the unclaimed share of Exxon Neftegas Ltd. (in case of proportional distribution of the share of the exiting participant among the existing participants of the PSA), but based on the opinion of an outside law firm, concluded that it is not an obligation of the company.

ONGC emphasizes that it has not yet received the financial results report for January-March 2023 from Sakhalin-1 LLC, but has "limited information" about production, well drilling and oil transportation.

As reported, the October decree changed the project operator from Exxon Neftegas Ltd. (which had stopped production at the project completely by October) to a Russian LLC. The new operator, Sakhalin-1 LLC, is registered in Yuzhno-Sakhalinsk, and the sole executive body is AO Sakhalinmorneftegaz-Shelf.

Sakhalinmorneftegaz-Shelf is entitled to 11.5% in the new LLC (in proportion to its share in the PSA). Another 8.5% is managed by RN-Astra. Foreign participants of PSA had to confirm their consent to receive their proportional share in the new operator within a month. Japan's SODECO (30%) and ONGC of India (20%) did so. In turn, Exxon Mobil (30%) announced the cessation of participation in the PSA project and its complete withdrawal from Russia.

In accordance with the presidential decree, the "relinquished" share is subject to appraisal and subsequent sale to a Russian legal entity that meets the criteria to be determined by the Russian government.

According to Rosneft, in Q4 2022 the average daily hydrocarbon production at the Sakhalin-1 project increased to 5.5 mln boe.