The U.S. and EU have imposed fresh sanctions on major Russian oil companies, Rosneft and Lukoil, and their subsidiaries, where Indian companies such as ONGC Videsh Ltd (OVL) and others hold minority stakes.
OVL is seeking legal advice from domestic and international law firms to ensure compliance and avoid violating sanctions.
Due to earlier sanctions, Indian companies have been unable to repatriate approximately $1.4 billion in dividends from Vankorneft over the past three years.
The new sanctions intensify India’s balancing act between maintaining its strategic energy partnership with Russia and protecting financial and consumer interests while avoiding Western penalties.
State-run ONGC Videsh Ltd (OVL) has sought legal advice as sanctions imposed by the United States and its allies begin to affect Russian oil fields in which Indian companies hold stakes, PTI reported, citing sources.
US President Donald Trump and several European Union countries have imposed fresh sanctions on two of Russia’s largest oil companies, Rosneft and Lukoil, in an effort to curb Moscow’s oil revenues, which the West claims are being used to fund the ongoing war in Ukraine.
The sanctions list also includes several subsidiaries of these Russian firms, including CJSC Vankorneft, where Indian companies are key minority stakeholders. OVL holds a 26% stake in Vankorneft, while a consortium comprising Oil India Ltd (OIL), Indian Oil Corporation (IOC), and Bharat PetroResources Ltd (BPRL) collectively owns 23.9%.
Although the new sanctions specify that restrictions do not apply to entities with less than 50% Russian ownership, OVL is proceeding with caution. “OVL is seeking legal opinions from domestic and international law firms to ensure it does not violate any sanctions,” PTI reported, citing sources.
Indian companies are entitled to receive dividends from the joint venture’s earnings through oil and gas sales. OVL, the overseas investment arm of ONGC, first entered the project in May 2016, acquiring a 15% stake from Rosneft, followed by an additional 11% in October 2016. The OIL-IOC-BPRL consortium also joined the project that year, acquiring a 23.9% stake. Together, these deals provided Indian companies access to around 13.87 million tonnes of oil equivalent.
Due to previous sanctions, Indian entities have been unable to repatriate dividends from Vankorneft for the past three years, according to a report by The Economic Times. These funds estimated at $1.4 billion remain parked in Russian bank accounts.
The latest sanctions have once again put Indian companies in a difficult position, forcing them to balance their strategic partnership with Russia against consumer interests and profitability concerns. According to The Hindu, violating sanctions could lead to serious repercussions, including being barred from raising funds overseas or facing restrictions on using US dollars for international transactions.
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