ONGC Awaits Russia's Directive On Transfer Of Abandonment Fund For Dividend Payments

Oil and Natural Gas Corp Ltd, said it is awaiting the directives from the Russian government to transfer the Abandonment Fund -- created for the project—to Russia, so that dividend payments can start for the Sakhalin-I project.

The dividend payment for Sakhalin 1 project in Russia stopped in 2022 after ExxonMobil the operator of the field unilaterally stopped production following the Russia-Ukraine war. The decision affected the partners including ONGC, Bharat Petro Resources Ltd and Indian Oil Corp Ltd.

Russian government took control of the ExxonMobil’s 30% stake in the field and formed a new company where the stakes were transferred respectively to the partners.

“However, the payment of dividend is contingent over transfer of Abandonment Fund, that is used to close the wells after they reach full capacity and are finally abandoned,” Rajarshi Gupta, managing director of ONGC Videsh told NDTV Profit.

The Abandonment Fund was created in London however after the war escalated it was transferred to Gift City in India. “Since the amount is in US Dollars (around $600 million) we have sought a change in directive to either make the payment in Rupee, Ruble or to partly compensate around $250 million lying in our account in Russia,” Gupta said.

“We expect the changed directives in the next two to three weeks,” Gupta said.

As far as CSJC Vankorneft project is concerned the company has regularly received the dividend payments. There is around $250 million equivalent Russian Ruble lying in the ONGC account. However, the company cannot repatriate the amount to India as the shareholding is registered in a Singapore entity, that is dubbed as unfriendly entity after the Russia-Ukraine war. But it can be used in projects in Russia, the official said.

ONGC Videsh has also sought operational and financial exemptions for its two projects in sanctions-hit Venezuela from the US government. The company produces around 12,000 barrels of oil per day in Venezuela and expects the production will allow it to compensate its $600 million pending dividends