"The war will not last forever, nor will the sanctions. We must move to secure our energy supplies," said one of these persons. "We understand the risk and we are willing to take the risk."
The company is evaluating the option to bid for Shell's 27.5% interest in the Sakhalin-II oil and gas project and ExxonMobil's 30% stake in the Sakhalin-I project, looking to acquire energy assets cheap as western oil companies exit Russia in the wake of the Ukraine invasion, they said.
These bids are still being discussed and have not yet been considered by the board of the company.
ONGC, Bharat Petroleum, Indian Oil, and Oil India have also held preliminary discussions among themselves to evaluate buying BP's 20% stake in Russian energy giant Rosneft, they said.
ONGC had Proposed Future Oil Revenues to Shell
ONGC is learnt to have made an offer to purchase Shell's stake in Salym, a joint venture with Russia's Gazprom Neft, which is developing the Salym fields in western Siberia. But Shell is said to have conveyed to ONGC that it can't accept the latter's offer. ONGC's offer didn't involve any immediate cash payment to Shell. Instead, ONGC had proposed future oil revenues to Shell from the Salym fields, sources said.
Salym produces 17,000 barrels of oil per day and 274 million cubic meters of associated gas in a year.
It couldn't be ascertained if ONGC is willing to make an improved offer for the Salym stake.
In their bids for Russian assets, Indian companies are likely to face competition from China and firms based elsewhere.
ONGC, BPCL, Indian Oil, and Oil India didn't respond to queries. Shell said it doesn't comment on acquisitions or divestment.
Western oil companies BP, Shell, and ExxonMobil announced their intention to exit the Russian oil and gas sector soon after its forces invaded Ukraine. The West has sought to isolate Moscow and stop countries, including India, from buying Russian oil.
India continues to buy oil from Russia and hopes to lock in some good upstream assets there at a cheaper rate as Western majors offload investments.
ONGC has a 20% stake in Sakhalin-I, where Exxon, the operator, declared force majeure recently following shipping insurance troubles that have led to production cuts.
India has traditionally shared close ties with Russia and has invested billions of dollars in various Russian oil and gas fields that until a few months ago were seen as much less risky than other investment destinations such as Africa or Latin America.
The Russian energy sector hasn't been sanctioned by the West thus far and some Russian lenders are still part of the SWIFT payment system, enabling buyers to source crude and pay for it through regular banking channels.
"Buying Russian crude is one thing. In case of sanctions intensifying, you could wind it back in just a couple of months. But investing in upstream could have deeper repercussions, including tougher reactions from the West," said another source, highlighting the risks involved in buying Russian assets now.
Indian investments have suffered in Iran and Venezuela due to US sanctions. Sanctions have primarily prevented ONGC from developing a prolific discovery it made in Iran more than a decade ago. The company has also been unable to repatriate dividends from its oilfields in Venezuela due to sanctions.
The departure of oil majors also means an erosion in capabilities for Russian projects.
"Western companies brought in a lot of technical competence to Russian projects and their departure might impact the progress of projects," said another person. "Without them, it might be challenging to maintain efficiency in some of the projects located in harsh geographical conditions."