Oil India Ltd (OIL) has taken steps to address the issue of its $150 million dividend that is currently stuck in Russia due to western sanctions imposed on Russian energy companies. The state-run company has engaged legal and tax consultants to assess possible strategies for repatriating the funds.
As of now, the money is being held in SBI’s Moscow branch. Oil India Ltd is part of two Indian consortiums that hold stakes in several Russian oilfields in Siberia. One consortium, comprising Oil India Ltd, Indian Oil Corp, and Bharat Petroresources Ltd, holds a 23.9% stake in CSJC Vankorneft, which owns the Vankor Field and North Vankor. These three firms are also part of another consortium of Indian state-run companies that collectively own a 29.9% stake in LLC Taas-Yuryakh.
Additionally, ONGC Videsh (OVL) holds a 26% stake in SCJC Vankorneft. Altogether, OVL, Bharat Petroresources Ltd, Indian Oil Corp, and Oil India Ltd are owed around $400 million in dividend payments from CSJC Vankorneft and LLC Taas-Yuryakh.
The funds have remained stuck in Russia due to the challenges associated with transferring dividend payments from the country, primarily because of the western sanctions against Russian energy firms.
Ranjit Rath, Chairman and Managing Director of Oil India Ltd, expressed confidence that the repatriation of these funds is only a matter of time, despite the temporary restrictions. Legal and tax consultants have been engaged to evaluate various possibilities for repatriation, including reinvesting the money in Russia or transferring it to their Singapore subsidiary.
Rath mentioned, “We are evaluating multiple options. One is, can we have this invested there, or we get it repatriated to our Singapore subsidiary. We are looking at both the options. The other alternative could be can we have an investment in a similar asset. Is that an opportunity? Right now, we are actually evaluating the possibilities of getting the money repatriated. But, the alternatives are being evaluated.”
Oil India Ltd is actively pursuing channels for repatriation, including engaging in discussions at the government-to-government level. It is noteworthy that Indian oil and gas companies collectively have dividends of approximately $600 million stuck in their investments in Russian oil assets.
Russia has become India’s top supplier of crude oil over the past 18 months due to deep discounts. Despite discounts narrowing to around $4 per barrel, Russian supplies continue to outpace those from traditional West Asian oil suppliers.
Russia, along with other OPEC+ countries, has announced output cuts to boost global oil prices. As a result, oil prices have been hovering above $90 per barrel in recent weeks. The Indian basket of crude oil on September 26 stood at $93.17 per barrel, significantly higher than the average of $74.93 in June.
