Oil and Natural Gas Corp (ONGC) said on Thursday it did not foresee any challenge in selling its share of crude from Russian oilfields or repatriating dividends from there in the current situation.
"Based on present applicable sanctions and removal of five Russian banks from SWIFT arrangement, the company does not foresee any challenge in selling crude oil or repatriating dividends except that scrutiny of financial transactions may be higher than usual," ONGC Videsh, the overseas arm of state-run explorer, said in an emailed response to ET. "ONGC Videsh banks in Russia are not affected by SWIFT cut off as of now as per our information," it added.
Oil prices rallied to $119 per barrel on Thursday on fears that Russian supplies will be disrupted by the volley of Western sanctions that are aimed at non-energy sectors. Cautious financiers, insurers, and traders are steering away from Russian oil cargoes. "As of now, we have not faced any issues (in selling crude)," ONGC said.
ONGC didn't clearly say if it was rethinking its investment plan in Vostok, Russia's massive arctic oil project. "Considering the dynamic nature of the development as a result of the Russia-Ukraine conflict, ONGC Videsh is keeping a close watch on the development," the company said on Vostok plans.
Sources told ET that Western sanctions would make it nearly impossible for ONGC to raise capital for investment in the massive Vostok project. Trafigura, which purchased a 10% stake in Vostok reportedly for 7 billion euros in 2020, has now said it's reviewing its investment in the project.
ONGC said it does not envisage any impact on the operations in any of its Russian projects and rouble depreciation will likely boost its profit. "Since oil prices are dollar-denominated, the revenue in rouble terms will increase in view of rouble depreciation. In fact, with substantial opex/capex being rouble-denominated, the profit in rouble terms shall increase disproportionately," the company said. But when dividends are converted into dollars for repatriation, much of the increases will be o ..
ONGC has stakes in three projects in Russia: 20% in Sakhalin, 26% in Vankorneft and 100% in Imperial.
BP, Shell, Exxon Mobil and Equinor have all said they plan to exit from Russian energy projects. Exxon, the operator of Sakhalin, has said it would exit the project. ONGC said it did not see any immediate impact on the operations of Sakhalin due to Exxon's exit.
Exxon owns a 30% stake in Sakhalin, Japan's SODECO 20% and Russia's state-run Rosneft 30%.
