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russian oil: Indian oil companies unable to repatriate $300-400 million in dividends from Russia

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Indian oil companies have been unable to repatriate $300-400 million in dividends from Russia since the beginning of the Ukraine war as payment channels are unavailable due to Western sanctions, a petroleum ministry official said on Saturday.

ONGC, Oil India, Indian Oil, and BPCL have participating interests in multiple oil and gas projects in Russia from which they earn dividends periodically. Since the beginning of the Ukraine war in February last year, which triggered Western sanctions on Russia, repatriating dividends has become difficult.

Most of the Russian banks have been cut off from the international payment system SWIFT. Payments for oil purchased from Russia are exempt from sanctions, but payments linked to assets, such the oil and gas projects in Russia, are not exempt, the official said. This permits Indian refiners to pay for the heavy volume of crude they purchase from Russia every month but doesn’t allow ONGC and others to repatriate their dividends. This also hampers their ability to make any new investment in Russian projects, the official said.
Companies have been exploring various means to offset the payments linked to dividends, he said. Offsetting dividend payments against the oil imported by refiners or other purchases India makes from Russia have been considered but no decision has yet been made, he added.

Indian refiners are not facing any problem in making payments for Russian oil, he said. In recent months, Russian oil has accounted for more than a third of India’s crude imports.

Oil prices have fallen to the level where it was a month ago but they will remain extremely volatile in the months ahead due to uncertainties around the recession in the developed world and expected demand expansion in China, the official said. Oil has fallen to $80 per barrel.

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