ONGC Videsh Ltd, the overseas arm of state-owned Oil and Natural Gas Corp, today signed initial agreements to barter its stake in its Russian unit Imperial Energy for acquiring a 25-30 per cent interest in Sistema-owned JSC Bashneft.
"OVL signed a Framework Agreement on Cooperation in Hydrocarbon Sector at Delhi with Sistema, the largest diversified public financial corporation in Russia and CIS, during the official visit of the President of the Russian Federation, Dmitry Medvedev to India," the company said in a statement here.
Bashneft produces 13 million tons of oil from fields in Russia and also owns refineries with a combined capacity of 20 million tons.
Besdies, OVL will also get a part of Sistema's 49 per cent stake in RussNef that has fields in Russia producing 12 million tons of oil and a stake in Trebs and Titov fields that Bashneft won recently.
In exchange, OVL will give away its 100 per cent interest in Imperial Energy, which it had in 2008 acquired for $2.1 billion.
Imperial produces little over 1 million tons of crude oil annually.
Sistema owns over 75 per cent stake in Bashneft and together with persons acting in concert, it controls over 90 per cent.
OVL said the potential transaction involves "Sistema's majority stake in JSC Bashneft and 49 per cent stake in RussNeft, each of which owns and operates numerous fields and refining assets in Russia (and) OVL's 100 per cent stake in Imperial Energy Corp., which owns and operates fields in Russia."
The agreement also covers any other oil and gas assets which Sistema or Bashneft may acquire before definitive agreements are signed.
This is in apparent reference to the Terbs and Titov fields in the Artic that Russia has awarded to Bashneft.
"The parties further agree to consider joint investments in each other’s existing and future exploratory assets in certain third countries," the statement said.
ONGC proposes to lead a consortium of Indian oil sector PSUs to consider acquiring the stake offered by Sistema under the Agreement, it added.