India’s ONGC Videsh Limited Acquires Stake in Russian Oil Project

(Moscow, Russia) – In one of the largest merger and acquisition transactions in Russia to date, a subsidiary of India’s state-owned oil and gas company, ONGC Videsh Limited, has contracted to purchase a 20 percent stake in the giant Sakhalin 1 oil field, owned by subsidiaries of Russian state-owned company Rosneft. The terms of the transaction envisage that ONGC Videsh will make a cash payment, pay its share of the further development of the project, and also carry the Rosneft subsidiaries in financing their share of the further development of the project until the project becomes cash flow positive. ONGC Videsh’s total investment in Sakhalin 1 is expected to reach $1.5 billion-$2 billion.

Sakhalin 1 is one of the most significant of the few oil and gas fields developed in Russia with the support of foreign investment under the production-sharing legal regime. Operated by a subsidiary of ExxonMobil, the project expects to begin producing oil in 2005.

Akin Gump represented ONGC Videsh in the transaction.  The ONGC Videsh in-house team assigned to the project by Atul Chandra, managing director of ONGC Videsh, included V. Ravindranath, A. Varma, A. Swarup and M. Nasseem. J.P. Morgan was exclusive financial advisor to ONGC Videsh.

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