ONGC Videsh Ltd, the overseas subsidiary of state-owned Oil and Natural Gas Corporation (ONGC), has regained a 20% stake in the Sakhalin 1 oil and gas field in Russia’s Far East, an official said on Monday.

In October, Russian President Vladimir Putin dissolved Exxon Neftegaz, a regional subsidiary of US supermajor ExxonMobil, as Sakhalin 1. -1) and transferred the project and all its assets and equipment to the new operator.

Other former foreign shareholders in the project are Japan’s Sodeco consortium and ONGC Videsh, who were asked to apply to the Russian government to regain their stake in the project.

OVL applied for and was awarded the same equity as before, the official said.

Production at the Sakhalin 1 field was halted in April 2022 after Exxon Oil & Gas declared force majeure on the project in response to international sanctions imposed on Russia following its invasion of Ukraine.

Moscow assigned the Sakhalin-1 project and operating rights to a regional subsidiary of Russian oil producer Rosneft. Russia then gave the project’s foreign shareholders – ExxonMobil, Sodeco and ONGC Videsh – until mid-November to apply to restore their stakes in the project.

The Sodeco consortium also retained its stake, but what will happen to Exxon’s stake is unclear. Exxon had previously said it had fully exited Sakhalin One after seizing assets and had no plans to operate the project.

Before the Ukraine war, Sakhalin 1 produced 220,000 barrels of oil daily. OVL’s share was 44,000 barrels per day or 2.2 million tons per year. However, Western sanctions following the Russia-Ukrainian war have limited oil extraction.

Production resumed in November and has reached 140,000-150,000 barrels per day, which the official said could return to original levels by the end of March.

Sakhalin-1 is a large oil and gas field in the Russian Far East Sea, covering an area of ​​1,140 square kilometres, including three offshore oil fields: Chayvo, Odoputu and Alkudon Dagi. OVL acquired a 20% stake in the project in July 2001.

Exxon Neftegas Limited (ENL) and Sodeco hold a 30% stake. Russia’s Rosneft holds the remaining 20% through its subsidiaries SMNG (11.5%) and RN Astra (8.5%).

Almost all of Sakhalin-1’s oil production 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.

On October 7, 2022, the President of Russia issued a decree transferring the rights and obligations of the consortium under the Sakhalin One Product Sharing Agreement (PSA) to the new company Sakhalin One LLC.

The new company will own 20% each of OVL and Rosneft, with Sodeco owning another 30%, the official added, adding that Russia has yet to decide what to do with Exxon’s 20% stake.

The partners are currently discussing a joint operating model for the oil field.