BOFIT Viikkokatsaus / BOFIT Weekly 2016/22

The Indian state energy company ONGC Videsh this week acquired a 15 % stake in Rosneft subsidiary Vankorneft for $1.3 billion. The deal was preliminarily agreed last autumn after Rosneft’s long search for a foreign partner for Vankorneft among e.g. Chinese companies. The deal may have been accelerated due to Rosneft’s tightened financial situation caused by low oil prices and sanctions. Rosneft is also in talks with Indian companies on other possible acquisitions that could raise their stake in Vankorneft to nearly 50 %. ONGC already holds a 20 % stake in the Sakhalin 1 project.

Vankorneft operates the giant Vankor oil field in Eastern Siberia that produced 4 % of Russia’s oil last year. All the oil fields located in Russia’s Far East and East Siberia represented 12 % of total oil output in Russia. Production is growing fastest in these regions, while it has been declining for years in the mature oil fields of Western Siberia.

The shift of oil demand growth to Asia (particularly to China, and lately increasingly to India), has supported development of fields in the Far East and Eastern Siberia. Nearly 30 % of Russia’s crude oil exports last year went to Asia. China accounted for 16 % of Russia’s oil exports, while the volume of exports to India was marginal.

Russian crude oil exports by regional market in 2015
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Source: Federal Customs Service of Russia.