India expects to receive dividends from Rosneft’s Taas-Yuriakh oilfield from January
An Indian consortium, which has inked an agreement to acquire 29.9% stake in Rosneft Oil Co.’s
Taas-Yuriakh oilfield in east Siberia for around $1.3 billion, expects to start receiving dividends for
the deal from January next year, said Utpal Bora, chairman and managing director at state-run Oil
India Ltd (OIL).
OIL is part of the three-member consortium, its other two members being Indian Oil Corp. Ltd (IOC)
and Bharat PetroResources Ltd (BPRL), a subsidiary of Bharat Petroleum Corp. Ltd (BPCL). The state-
run firms inked the agreement in March this year to acquire 29.9% stake in LLC TYNGD, or TAAS-
Yuryakh Neftegazodobycha LLC, which owns the Taas-Yuriakh oilfield.
“The acquisition is subject to relevant board, government and regulatory approvals, and is expected
to close by September 2016,” the companies said in a 16 March statement.
While Rosneft holds 80% stake in LLC TYNGD, BP Plc owns the rest through their respective
subsidiaries. Taas-Yuriakh is a producing oilfield and produces 20,000 barrels per day (bpd), which is
expected to go up to 100,000 bpd by 2021.
“We will start getting dividends from the beginning of the fourth quarter,” said Bora.
The consortium has also struck a $2.02 billion deal to acquire 23.9% equity stake in Rosneft’s Vankor
field.
Queries emailed to the spokespersons of IOC, BPCL and Rosneft on 4 August remained unanswered.
These deals have been structured through government-to- government facilitation. India has built up
a significant energy portfolio in Russia with an investment of around $4.25 billion.
A person close to the development, requesting anonymity, called the TYNGD deal a risky venture
because the acquisition is being done in a corporate manner and not in a participatory manner.
“A participatory deal guarantees a 30% share of the dividend on the spot but a corporate deal
depends on quarterly and annual results, thus bringing about a lag in payments,” the person
explained.
A delay in receiving dividend is not a new phenomenon for India’s national oil companies. Around
$687 million is owed to state-run ONGC Videsh Ltd (OVL) in dividends from Venezuela’s San Cristobal
oil exploration project.
Experts believe that these efforts are for energy security rather than for dividends.
“A long-term vision is needed for this. If oil prices remain subdued, dividends to oil companies will be
minimal as well. However, these ventures will assure a better and more reliable supply,” said D.K.
Shrivastava, chief policy adviser at consultancy firm EY.
This comes in the backdrop of a fall in international crude prices, which has made oil-producing
countries financially vulnerable. Russia is particularly at risk because it has to additionally cope with
the impact of the sanctions imposed by Western nations.
India imported 202.85 million tonne (MT) of crude oil in 2015-16 for Rs.4.16 trillion, according to
Petroleum Planning and Analysis Cell, which works under the ministry of petroleum and natural gas.
For 2014-15, India imported 189 MT of crude oil at a cost of Rs.6.87 trillion. The Narendra Modi-led
National Democratic Alliance government aims to halve India’s energy imports by 2030.