ONGC said to be moving closer to keeping 20% stake in Russia's Sakhalin-1 project

Economic Times
Economic Times
5d ago • 10 views
ONGC is close to securing its 20% stake in Russia's Sakhalin-1 project despite sanctions preventing dividend repatriation. This is significant for India's energy strategy amid geopolitical tensions.
ONGC said to be moving closer to keeping 20% stake in Russia's Sakhalin-1 project
A What happened
ONGC Videsh Ltd, the overseas investment arm of India's Oil and Natural Gas Corporation (ONGC), is making strides to retain its 20% stake in the Sakhalin-1 oil and gas project in Russia. The company, along with other Indian state-run firms, has faced difficulties repatriating approximately $800 million in dividends due to sanctions imposed after Russia's invasion of Ukraine. In response, ONGC intends to utilize these frozen dividends to contribute to an abandonment fund, which is essential for decommissioning activities and environmental protection. This move comes ahead of a visit by Russian President Vladimir Putin to New Delhi, highlighting the ongoing energy partnership between India and Russia. The situation is complicated by a decree signed by Putin that allows foreign investors to regain shares in the project, contingent on their support for lifting Western sanctions and fulfilling contractual obligations.
★

Key insights

  • 1

    Sanctions Impact: Western sanctions hinder dividend repatriation for Indian firms.

  • 2

    Abandonment Fund: Funds are needed for environmental decommissioning of the project.

  • 3

    Geopolitical Context: India's energy strategy is affected by Russia's geopolitical actions.

Takeaways

ONGC's efforts to retain its stake in Sakhalin-1 reflect the complexities of international energy investments amid sanctions and geopolitical tensions. The situation underscores the importance of strategic partnerships in the energy sector.

Topics

Business & Markets Economy World & Politics International Affairs Climate & Environment Energy