Production at Russia's Sakhalin-1 block, in which ONGC has a 20% stake, will reach near normal by March after a halt for months last year following the force majeure by operator ExxonMobil, an official said. The Sakhalin block is producing around 140,000 barrels per day of oil, which will likely rise to 200,000 barrels per day by the end of the current fiscal year, the official said. The block produced around 220,000 barrels per day of oil before Russia's invasion of Ukraine in February.
In response to the war, western oil majors such as ExxonMobil, BP, Shell and Equinor decided to exit Russia. ExxonMobil, the operator with a 30% participating interest in Sakhalin-1, declared force majeure, leading to a halt of production at the
block in May. In October, Russia removed Exxon as the operator and made a newly-formed Russian entity the new operator of the block. The existing stakeholders in the Sakhalin-1 were assigned a proportionate stake in the new entity after they applied for it. ONGC now has a 20% stake in the new operator while Russia's Rosneft and Japan's Sodeco have 20% and 30% stakes, respectively, the official said. Exxon is yet to apply for a stake in the new entity. The new operator is being managed mainly by the Russian executives.
ONGC gets the share of its oil from the Sakhalin block, which it can sell to its customers. ONGC as well as other state-run firms-Oil India, Indian Oil, BPCL-have investments in other Russian fields from which they receive cash dividends, not oil. They have not been able to repatriate their dividends for the last year as Russia imposed restrictions following the war. Companies are in discussions with the Russian government for repatriation, the official said. He didn't give more details.
If Indian firms will be keen on buying the share Exxon has not yet subscribed to in the new operator, the official said it would depend on whether Russia offers it and at what price. "It will have to be evaluated as any other new business investment proposal in the light of the block's production capacity, oil prices, and the geopolitical situation," the official said. Russia has made a similar intervention at the Sakhalin-2 block, where Shell was the operator. Shell's share in the new operating entity is still unassigned.
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