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Cash dynamo to tap Russian energy

Mangalore, Dec. 2 (PTI): India plans to invest $5 billion in various projects to source one billion barrels of oil and oil-equivalent gas from Russia as part of measures to diversify its energy sources.

“We are targeting one billion barrels of oil and oil-equivalent gas from Russia,” ONGC Videsh Ltd (OVL) managing director R.S. Butola said at the function to receive the first oil from Sakhalin I project.

Although he did not elaborate on the proposed projects, sources said the total investment could be to the tune of $5 billion.

Petroleum minister Murli Deora said India plans to get more oil and gas from Russia to diversify sources of energy.

“Russia being the largest producer of gas and having largest gas reserves is definitely important to us. The multi-polar energy supply chain, which Russia is capable of creating, would help us diversify our sources,” Deora said.

India imports more than 70 per cent of its crude requirement and most of it come from the West Asian countries.

Butola said ONGC’s total exposure in Sakhalin I has come down to $1.5 billion after Russia’s Rosneft prepaid the $1.2-billion loan the Indian firm had extended to it as part of the agreement to get OVL to get into Sakhalin.

Rosneft had in 2001 asked OVL to finance its 20 per cent stake in Sakhalin I. This loan was to be repaid in the form of crude oil but the Russian company paid it in cash.

Butola said the total project cost of the Sakhalin I stands at $12.8 billion and OVL would chip in its share through revenues generated from crude oil sales.

Butola had earlier said ONGC has proposed an exploration venture with Russian state-run firms to explore for oil in that country. “We have proposed a joint venture with either Rosneft or Gazprom or both for exploration and production of oil and gas,” he had said on November 2.

ONGC has proposed to hunt for oil all over Russia. The Russian company will hold a 51 per cent stake in the proposed venture, while ONGC would have the rest.

On the other hand, OVL had proposed to team up with Rosneft to bid for Sakhalin III project in far east Russia.

OVL, the overseas arm of Oil and Natural Gas Corporation, has a 20 per cent stake in the Sakhalin I project. It has shipped 90 thousand tonnes (700,000 barrels) of crude from its share in the project. It will ship second cargo by the month-end.

ONGC’s subsidiary Mangalore Refinery and Petrochemicals Ltd (MRPL) will process the Sakhalin crude.

Sakhalin I project will reach the peak rate of 12 million tonnes per year once a new onshore crude processing unit is commissioned in this month.

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