India will use dividends from assets in Russia to pay for oil

By Rhod Mackenzie

A number of leading oil companies in India are considering the possibility of using revenues from assets in Russia totalling $600 million to buy oil from the Russian Federation because of difficulties in repatriating dividends, The Economic Times newspaper reported, citing officials.

"Indian oil companies are exploring the possibility of using nearly $600 million of their dividend income stuck in Russia to buy oil from that country, officials said on Thursday," the newspaper quoted officials as saying.

It is understood that four companies are considering such a move: Indian Oil Corporation, a unit of Bharat Petroleum Corporation Ltd, Oil India Ltd and ONGC Videsh Ltd. Their dividend income from investments in Russian projects cannot be repatriated, The Economic Times adds.
In this regard, one of the solutions being considered is to provide Russian funds as a loan to companies buying oil in Russia, with further repayment in India, the newspaper reports. Another possibility, according to officials, is to purchase oil with blocked money. A final decision could be made within two to three months, one of the sources said.

The total investment of Indian companies in Russian projects is $5.46 billion, including 49.9% of the shares of Vankorneft, which is developing the Vankor oil and gas condensate field (26% belongs to ONGC, 23.9% to three other companies, Rosneft owns shares of 50.1%), as well as 29.9% in the Taas-Yuryakh Neftegazodobycha company, which is developing part of the Srednebotuobinskoye field in Eastern Siberia (the share belongs to the consortium of Oil India Limited, Indian Oil Corporation and Bharat Petroleum).

As for the source of the initial difficulties with repatriation, for example, earlier in the summer, ONGC reported in a report that in June it received 4.829 billion rubles in final dividends from its participation in Vankorneft for last year, they are stored in accounts in a Russian bank and may be used only on the territory of the Russian Federation, and a total of 11.348 billion rubles are awaiting repatriation, which poses difficulties since the ONGC subsidiary responsible for Vankorneft is located in Singapore, which is considered a country unfriendly to the Russian Federation.