ONGC Videsh Ltd, the overseas arm of state owned Oil and Natural Gas Corp, on Tuesday signed initial agreements to barter its stake in its Russian unit Imperial Energy for acquiring a 25% to 30% interest in Sistema owned JSC Bashneft.

The company in a statement said that “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, Mr Dmitry Medvedev to India.”

Bashneft produces 13 million tonnes of oil from fields in Russia and also owns refineries with a combined capacity of 20 million tonnes. Besides, OVL will also get a part of Sistema’s 49% stake in RussNef that has fields in Russia producing 12 million tonnes 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 USD 2.1 billion. Imperial produces little over 1 million tonnes of crude oil annually.

Sistema owns over 75% stake in Bashneft and together with persons acting in concert, it controls over 90%.

OVL said the potential transaction involves Sistema’s majority stake in JSC Bashneft and 49% stake in RussNeft, each of which owns and operates numerous fields and refining assets in Russia and OVL’s 100% 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.

The statement said that “The parties further agree to consider joint investments in each other’s existing and future exploratory assets in certain third countries.”

(Sourced from PTI)