The Hindu Business Line : ONGC extends loan to OAO Rosneft for Sakhalin-1 project

APART from paying its share of financial exposure in Sakhalin-1, Oil and Natural Gas Corporation Ltd (ONGC) has given a soft loan to Russian company, OAO Rosneft, to fund the latter's portion in the $12.8-billion project.

Speaking to Business Line, ONGC officials said that the total financial exposure of ONGC and Rosneft in the project is $2.7 billion as of March 31, 2005. Out of this, ONGC is understood to have paid a premium of about $300 million at the time of the entry into the project. The remaining amount out of the total contribution of $2.7 billion would be divided between ONGC and Rosneft.

More from Sakhalin?: Sources in ONGC were, however, reluctant to disclose the loan amount. Asked whether this amount was for doubling the quantity of oil and natural gas, which India will get from Sakhalin-1, the sources said that had not been worked out as yet.

However, indications are that besides its share of 20 per cent of the output, India may get Rosneft's share till the loan is repaid. ONGC is expected to get fuel in payment of the debt.

OVL's interest: The Union Petroleum Minister, Mr Mani Shankar Aiyar, had said during his recent visit to Russia that Rosneft was keen to partner with the overseas arm of ONGC, ONGC Videsh Ltd, for projects. The Minister indicated that the Indian companies may buy a stake in OAO Sibneft.

Exxon Mobil Corporation leads the Sakhalin-1 project. This is India's largest investment abroad in oil and gas production. The fields are expected to produce 23,000 barrels per day of oil and about 58 million standard cubic feet of gas per day. Oil production from Sakhalin-1 fields would rise to 50,000 barrels per day by April 2006 and by the year-end, it is expected to hit the peak level of production at 2,50,000 barrels per day. India consumes 2.4 million barrels of oil a day.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page