The Telegraph
Thursday , May 8 , 2014
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OIL stake in Russia

New Delhi, May 7: State-owned explorer Oil India Ltd (OIL) will pick up a 50 per cent stake in PetroNeft’s oil block in Russia for $85 million.

OIL will pay $35 million in cash and give $5 million as a performance bonus. It will also invest $45 million in exploration and production.

OIL last month signed an agreement with Ireland-registered but Russia-focused company PetroNeft Resources plc to take a 50 per cent non-operating interest in Tungolsky Licence 61 in Tomsk Oblast in Russia, official sources said.

The block is located on the eastern side of the Ob River in the least explored oil-bearing region of the Tomsk Oblast. The 4,991 square kilometre licence contains 7 oil fields and over 25 identified prospects and leads.

The income from the deal will settle Petroneft’s debts. The company plans to resume drillion up to six wells from June.

According to independent expert Ryder Scott, the block holds 117.68 million barrels of oil reserves. These reserve estimates do not include the new oil find at Sibkrayevskoye, officials said.

The block started production in 2010 and achieved a peak of 3,000 barrel of oil per day in 2011.

PetroNeft won the state auction for the block and acquired it in May 2005.

Sources said the transaction was subject to PetroNeft shareholder nod and regulatory approvals. PetroNeft has called an extraordinary general meeting of shareholders on May 9 for a vote on the deal.

The London and Dublin-listed firm is facing a shareholder campaign that wants to change the company’s board and strategy following disappointing drilling and production results in Western Siberia, its main area of operation.