ONGC Videsh Ltd, an overseas subsidiary of state-owned oil and gas company ONGC, has proposed to regain a 20% stake in the Sakhalin-1 oil and gas project in Russia’s Far East, media reports said.

Russian President Vladimir Putin, earlier this month, disbanded Exxon Neftigaz, the regional subsidiary of US supergiant ExxonMobil as operator of Sakhalin-1 and put the project and all its assets together. Assets and equipment were transferred to a new operator.

The other former foreign shareholders of the project – Japan’s Sodeco consortium and ONGC Videsh – must apply to the Russian government to regain their stake in the project. OVL is applying to regain its 20% stake in the project, three people familiar with the matter said.

Production of Sakhalin-1 was halted in May after Exxon Neftegaz declared force majeure on the project in response to international sanctions imposed on Russia following its invasion of Ukraine in February.

OVL has stakes in 33 oil and gas properties in 15 countries, most of which are exploration properties. Sakhalin One is one of OVL’s longest-running investment projects and has recovered all investment funds and enjoys dividends. Sakhalin-1 is a large oil and gas field in the Russian Far East, covering an area of 1,140 square kilometres, including three offshore fields of Chayvo, Odoptu and ArkutunDagi. OVL acquired a 20% stake in the project in July 2001.

Sakhalin-1 produced 220,000 barrels of oil per day before the Ukrainian war. OVL’s share is 44,000 b/d or 2.2 million t/y. Exxon Oil & Gas Limited (ENL) and Sodeco hold a 30% stake. Rosneft holds the remaining 20% through its subsidiaries SMNG (11.5%) and RN Astra (8.5%). Exxon Oil & Gas Limited (ENL) and Sodeco hold a 30% stake.
The officials said that Russian authorities have set up a new operator known as Sakhalin-1 as a limited liability company with a base capital of just 10,000 rubles ($160). The new entity is managed by Rosneft subsidiary Sakhalinmorneftegaz-shelf (SMNG).

Sakhalin-1 produced 220,000 barrels of oil per day before the Ukrainian war. OVL’s share is 44,000 barrels per day or 2.2 million tons per year. Exxon Oil & Gas Limited (ENL) and Sodeco hold a 30% stake.

Rosneft holds the remaining 20% through its subsidiaries SMNG (11.5%) and RN Astra (8.5%). Exxon Oil & Gas Limited (ENL) and Sodeco hold a 30% stake.

The officials said that Russian authorities have set up a new operator known as Sakhalin-1 as a limited liability company with a base capital of just 10,000 rubles ($160). The new entity is managed by Rosneft subsidiary Sakhalinmorneftegaz-shelf (SMNG).

ENL will now have two weeks to transfer its assets, financial obligations, personnel and existing contracts to the new operator, while foreign partners must apply within a month to take a similarly sized stake in the new operator.

Almost all oil production from Sakhalin-1 is shipped to international markets via the De-Kastri terminal in the Khabarovsk region of mainland Russia, which is connected to Sakhalin-1 by a dedicated pipeline.

They said Russia was keen to restart production in the coming winter to avoid potential damage to idled pipeline infrastructure.