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MarketWatch (USA): Indian official says interested in joining Sakhalin III project

Mar 29, 2006
LONDON (MarketWatch) — The Indian government is interested in participating in Russia's Sakhalin III oil and gas project through one of the country's state-run companies, a top Indian official said Tuesday.
The Sakhalin II project, controlled by Royal Dutch Shell PLC (RDSB.LN), “is closed. On Sakhalin III, we are looking for opportunities,” M.S. Srinivasan, the secretary for India's petroleum and natural gas ministry told Dow Jones Newswires during a visit to London.
He said India's petroleum and gas minister, Murli Deora was in touch with his Russian counterpart on the project, located off Russia's Far East coast.
Asked if India was seeking participation in the project through state-run companies such as Oil & Natural Gas Corp. Ltd (500312.BY), or ONGC, Srinivasan answered “yes.”
ONGC already has a 20% stake in the Exxon Mobil Corp. (XOM)-led Sakhalin I project.
However, the underdeveloped Sakhalin III acreage has long been coveted by oil companies.
Last year, Sinopec Shanghai Petrochemical Co. (SHI) agreed to buy about 25.1% in the Veninsky sector of Sakhalin III. Russian state-owned company OAO Rosneft (RNT.YY), the largest shareholder, still owns about 49.9% in Veninsky and the Sakhalin regional government about 25.1%, a Rosneft spokesman said Wednesday.
The spokesman said no talks are taking place between Rosneft and India, or Indian companies, on a possible participation in Veninsky. He added that discussions, if any, could take place with the Sakhalin government, although the latter couldn't be reached for confirmation.
Veninsky's estimated recoverable reserves stand at 114 million tons of oil and 315 billion cubic meters of gas, according to Rosneft.
However, other blocks in Sakhalin III are set to be re-awarded after a new mineral law comes into force at a yet-to-be determined date.
Rights to explore the blocks were granted in 1993 to a consortium headed by Exxon Mobil and Chevron Inc. (CVX), together with Rosneft, but were revoked in 2004. It is possible they could re-awarded to another applicant.
In its annual 2005 report, Exxon says “exploration activities on the Sakhalin III blocks are pending the award of exploration and production licenses by the Russian government.”
It is unclear whether the Sakhalin III blocks could come under a strategic list of assets which can't be controlled by foreign companies.
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