Rosneft to Form a Unique International Consortium Based on the Vankor Project

Rosneft, Oil India, Indian Oil and Bharat Petroresources signed a Heads of agreement in respect to the acquisition by a group of Indian investors of a 23,9% share in Vankroneft. The document envisages the possible execution of legally binding documents with regard to the sale and purchase transaction.

Rosneft also signed with ONGC Videsh Limited a Memorandum of understanding for cooperation in respect of the Vankor project, envisaging the prospective increase to 26% of the share of the Indian company in Vankroneft. The document also oversees the analysis of the joint trading development’s potential, including the possibility of entering into long-term crude-oil supply contracts. Earlier the companies signed the agreement of sale and purchase of 15% in Vankorneft and shareholders agreement in regard of the joint enterprise management. The closing of the sale and purchase deal is expected in the short term.

Moreover Rosneft, Oil India, Indian Oil and Bharat Petroresources signed a Memorandum of understanding for cooperation in respect of the Vankor project, envisaging the joint analysis of a potential partnership with the scope of the development of the Suzunskoye, Tagulskoye and Lodochnoye fields.

The implementation of the signed documents will allow creating on the basis of the Vankor project a unique international consortium with Rosneft playing a key role – the Company will maintain its majority share in the project. The creation of an international energy hub will significantly amplify the production potential of the Vankor cluster. Indian partners will obtain a substantial share in one the best upstream projects in the world with sizeable reserves of high-quality feedstock and one of the lowest lifting costs in the industry. The potential organization of joint trade operations will allow solidifying positions of Russian energy resources in a highly competitive environment of the Asia Pacific region and will have a positive effect on the stabilization of the market.

After the signing ceremony Rosneft Chairman of the Management board Igor Sechin said: “The signed documents literally mark the turning of a new leaf in the cooperation between Russia and India in the energy sector, reached in continuation of the agreements, achieved at the highest level between the President of the Russian Federation Vladimir Putin and the Prime Minster of India Narendra Modi. The cooperation formula, designed at the corporate level, is aimed at the creation of vertically integrated model, allowing India partners to participate in the upstream sector, whilst opening the growing India market to Rosneft. The reached agreements represent a shift from energy dependency to energy partnership of both countries”.

The Minister of petroleum and natural gas of India Dharmendra Pradhan noted that: “The signed documents are a remarkable achievement, demonstrating the level of partnership between Russia and India. It is of prime importance that the cooperation is of a long-term nature and it will deliver significant multiplicative effect for the economies of both countries”.

Vankorneft, Rosneft subsidiary, was established in 2004 for development of Vankor oil and gas condensate field – the largest of the fields, discovered and put into operation in Russia in the last 25 years. The field is situated in the Turukhansky district of Krasnoyarsk Territory, 142 km away from the city of Igarka.

Recoverable resources of the Vankor field as of 01.01.2016 stood at 361 mln t of oil and condensate and 138 bcm of gas.

In 2015 Vankor produced 22 mln tons of oil and 8.71 BCM of gas. Thanks to implemented technological solutions, oil recovery factor at Vankor is one of the highest in Russia. The field is drilled with the inclined- and production- injection wells with horizontal ending which provides high well flow rates. The process of oil production is fully automated.

On December, 25 Rosneft and ONGC Videsh Limited signed an Agreement of Confirmation of successful completion of the first stage pre-completion actions in relation to the creation of a joint venture in Vankorneft. The document was signed in the presence of the President of Russia Vladimir Putin and the Prime Minister of India Narendra Modi.