23 Nov 2023 14:54

ONGC turns to Russia for assistance in formalizing participation in new Sakhalin-1 operator

MOSCOW. Nov 23 (Interfax) - India's ONGC is actively working to resolve the issue of transferring its share of assets from the liquidation fund of the Sakhalin-1 PSA project to a new operator (Sakhalin-1 LLC), and has asked for Russia's assistance, Chief Executive Officer for Finance of ONGC Videsh Limited Vinod Hallan said during a video conference with analysts.

"Last week we submitted an application to the Russian Federation to consider the possibility of receiving funds from the liquidation fund [Sakhalin-1, associated with the change of project operator] in rubles. We hope that the decision will be made quickly. We also contacted Commercial Indo Bank so that they would clarify with the Russian Central Bank that we have no restrictions on borrowing in rubles, since the funds from the liquidation fund we received from JP Morgan are denominated in US dollars. So we are being proactive and hope that the issue will be resolved soon," he said.

Hallan also noted that ONGC is considering the possibility of using dividends from Vankorneft which are stuck in Russia, about 16 billion rubles, to fulfill its obligations under the Sakhalin-1 project.

It was previously reported that ONGC is having problems registering its share in the new operator of the Sakhalin-1 project. The Indian company received its share of the project's liquidation fund on April 6, but was unable to transfer it to Sakhalin-1 LLC due to sanctions imposed on Russian banks and counter-sanctions measures from Russia. ONGC noted that it is negotiating with the new project operator about possible alternative ways to transfer the assets.

In May, the Indian company's balance sheet reflected 143.24 billion rupees (at that time - about $1.4 billion) of "deferred investments" in Sakhalin-1.

It was also reported that ONGC was faced with a problem withdrawing dividends from Vankorneft due to the ownership structure, as the company participates in the project through a structure in Singapore, which is on the Russian authorities' approved list of unfriendly countries. The funds (11.4 billion rubles for 2022 and 4.5 billion rubles for H1 2023) are located in Commercial Indo Bank LLC (the Russian subsidiary of the State Bank of India, the largest bank in India), and restrictions are imposed on their repatriation, so the amount is only available for use in the country and currency of receipt.