ONGC faces problems transferring dividends from Russian projects due to ownership structure

24 Nov 2022 09:47

ONGC faces problems transferring dividends from Russian projects due to ownership structure

MOSCOW. Nov 24 (Interfax) – Indian oil and gas company ONGC has shown that companies from countries that are friendly toward Russia can face problems transferring dividends from their Russian projects if their corporate structure includes entities from “unfriendly” jurisdictions.

The interim dividends that ONGC recently received from Vankorneft are sitting in the company’s Russian banks and the company is now working on mechanisms to repatriate them to Singapore, where its holding company for the Russian asset is located, ONGC chief commercial officer Nirmal Kumar said in a second-quarter earnings call with investors.

“Because Singapore is presently designated as a unfriendly country by the Russian authority, we have certain issues with repatriation, but we have received the dividends and they presently remain in rubles” in Russia, Kumar said.

Special ruble C-type accounts, which were introduced by a presidential decree issued March 5, 2022, are one of the central elements of the capital restrictions Russia introduced in response to sanctions against the country. Among other things, earnings on securities held by “unfriendly” nonresidents are blocked in these accounts and can be converted into foreign currency only with the permission of the Russian authorities. As of the beginning of November, such accounts held over 280 billion rubles, Central Bank data showed.

Vankorneft owns the key field of the Vankor cluster, Vankorskoye, which produced 10.5 million tonnes of oil in 2021, 7% less than a year earlier. Indian companies ONGC Videsh Ltd., Oil India Limited, Indian Oil Corporation and Bharat Petroresources own 49.9% of Vankorneft and Rosneft owns the remainder.