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No way out of Moscow: Why Indian oil companies’ $1.4 billion worth of dividends are stuck in Russia
Indian public sector oil companies are facing a $1.4-billion question: how to repatriate their dividend income that has been piling up in Russia for over three years now? The Indian government and the companies have been attempting to find a resolution, but success has so far eluded them. While they are confident that the money is safe, as dividends from their investment in Russian oil assets are being deposited at regular intervals in the companies’ accounts in an Indian bank in Moscow, they have been unable to access and use it.
These stranded dividends originate from billions of dollars invested by Indian public sector oil companies over the years to acquire stakes in Russian producing oil and gas projects. These cumulative investments are estimated to be over $6 billion. This strategy forms a crucial part of India’s overall energy security plan, as India relies heavily on oil imports.
The Indian companies include ONGC Videsh (OVL), the overseas investment arm of Oil and Natural Gas Corporation (ONGC). OVL holds a 20 per cent stake in the Sakhalin-1 project and a 26 per cent stake in the Vankor project. OVL’s share of the stuck dividends is close to $400illion. Then there is the consortium of Indian Oil Corporation (IOC), Oil India (OIL), and Bharat Petroleum Corporation (BPCL) arm Bharat PetroResources (BPRL), which together hold a 23.9 per cent share in Vankor and a 29.9 per cent share in the Taas-Yuryakh project. This consortium’s cumulative share of the stranded dividends is the larger portion, around $1 billion, according to industry estimates.
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