ONGC Videsh, the overseas arm of the state-owned Oil and Natural Gas Corporation (ONGC), has repurchased a 20 per cent stake in the Sakhalin-1 oil and gas fields in Russia’s far east, an official said on Monday.
Last year in October, Russian President Vladimir Putin disbanded Exxon Neftegaz, a regional subsidiary of ExxonMobil, as operator of the Sakhalin-1 and transferred the project and all of its assets and equipment to a new operator.
The project’s other former foreign shareholders, Japan’s Sodeco consortium and ONGC Videsh, were asked to apply to the Russian government to reclaim their stakes.
According to the official, OVL (ONGC Videsh Ltd) applied and was granted the same shareholding as before.
Exxon Neftegaz declared force majeure at the Sakhalin-1 project in April 2022 in response to international sanctions imposed on Russia following its invasion of Ukraine.
The Sakhalin-1 project and operatorship were assigned to a regional subsidiary of Russian oil producer Rosneft by Moscow. Russia then asked the project’s foreign shareholders, ExxonMobil, Sodeco, and ONGC Videsh, to apply to reinstate their stakes in the project by mid-November.
The Sodeco consortium has retained its stake as well, but it is unclear what will happen to ExxonMobil’s stake.
ExxonMobil previously stated that it had completely exited Sakhalin-1 following asset confiscation and has no plans to operate the project.
Before the Ukraine war, Sakhalin-1 was producing 220,000 barrels of oil per day. OVL’s share was 44,000 bpd, or 2.2 million tonnes per year. However, Western sanctions imposed in the aftermath of the Russia-Ukraine war hampered oil evacuation.
Production resumed in November and has reached 140,000-150,000 bpd, according to the official, who added that output is expected to return to normal levels by the end of March.
Sakhalin-1 is a large oil and gas field in Russia’s far east that spans 1,140 square kilometres and includes three offshore fields: Chayvo, Odoptu and ArkutunDagi. In July 2001, OVL purchased a 20 per cent stake in the project.
Exxon Neftegas Limited (ENL) and Sodeco each owned 30 per cent of the company. The remaining 20 per cent is owned by Russia’s Rosneft through its subsidiaries SMNG (11.5 per cent) and RN Astra (8.5 per cent).
Almost all of Sakhalin-1’s oil production is shipped to international markets via the De-Kastri terminal, located on the Russian mainland in the Khabarovsk region and linked to Sakhalin-1 via a dedicated pipeline.
On 7 October 2022, the Russian President issued a decree transferring the consortium’s rights and obligations under the Sakhalin-1 production sharing agreement (PSA) to a new company, Sakhalin-1 Limited Liability Company.
According to the official, OVL and Rosneft each own 20 per cent of the new company, with Sodeco owning 30 per cent. Russia has yet to decide what to do with its 20 per cent stake in ExxonMobil.
The partners are currently debating a joint operation model for the fields.