Exxon's exit from Russia puts OVL in a fix

New Delhi: ExxonMobil Corp's decision to exit Russia has put India's flagship overseas firm ONGC Videsh in a fix as it is a partner in the global energy giant-operated Sakhalin-1 oil fields in Far East Russia, sources said. ONGC Videsh Ltd (OVL) and three other state-owned Indian firms hold 49.9 per cent stake in a separate Vankor oilfield in west Siberia but that investment will not be impacted as they repatriated their dividend income from last year in January 2022 and would not immediately face issues because of Russia being cut off from the global payment system SWIFT over its Ukraine invasion.

ExxonMobil holds 30 per cent stake in the Sakhalin-1 offshore oil assets, where OVL - the overseas investment arm of state-owned Oil and Natural Gas Corporation (ONGC) - has a 20 per cent interest.

The field, which produced some 227,400 barrels of oil a day (11.35 million tonnes a year) and over 12 billion cubic metres of natural and associated gas in 2021, is operated by ExxonMobil. While it has not put a timeframe for leaving the venture, the exit of ExxonMobil would mean technical manpower and expertise would no longer be available at the project, three sources with direct knowledge of the matter said.

In all likelihood, Russia's Rosneft, which holds 20 per cent participating interest in the fields, will take over Exxon's share, they said. The Sakhalin-1 project, where the partners have so far invested $17 billion in developing the reserves lying below the sea that freezes during winter, is regarded as a technical marvel.

It involved developing three oil and gas fields off Sakhalin -- Odoptu, Chayvo and Arkutun-Dagi -- by drilling record-setting wells from shore that bored down and sideways for up to seven miles to reach the reservoirs that had frustrated the Soviets when they discovered oil there in 1979.