Indian oil companies’ dividends totaling up to $400 million from Russian projects stuck
Dividends totaling $300 million to $400 million payable to Indian oil companies from their investments in Russian oil and gas projects are stuck due to payment channel-related issues in the aftermath of Russia’s invasion of Ukraine in February 2022, a top government official said. Four public sector oil and gas companies –ONGC Videsh, Oil India, Indian Oil Corporation, and Bharat PetroResources — have stakes in various oil and gas projects in Russia. These projects include Sakhalin-1, Vankor, and Taas-Yuryakh.
Soon after the war in Ukraine broke out, several major Russian banks were banned from the Society for Worldwide Interbank Financial Telecommunication (SWIFT) financial transaction processing system, constricting Moscow’s ability to access the global payments system. In the weeks that followed Russia’s invasion of Ukraine, Russian banks including Bank Otkritie, Novikombank, Promsvyazbank, Rossiya Bank, Sovcombank, VEB, VTB, and Sberbank were removed from SWIFT.
This hindered dividend payments to Indian oil and gas companies, and the dues have ballooned to nearly $400 million over the past year or so, said the official, who did not wish to be identified.
India and Russia have been discussing the issue on a regular basis and efforts are on from both sides to resolve it, said the official, adding that while the dividend dues are not small in amount, they are insignificant in comparison to the overall oil trade between Russia and India and have no bearing on it.
From being a marginal supplier of crude to India before the war in Ukraine, Russia has emerged as New Delhi’s biggest source of oil over the past year, overtaking heavyweights like Iraq and Saudi Arabia. Indian refiners started snapping up Russian crude, which was being offered at a discount by Moscow as the West began to shun Russian barrels.
The rapid expansion in oil trade between the two countries resulted in Moscow storming into the club of India’s top 5 trade partners for the 2022-23 fiscal. Prior to that, Russia was not even among India’s top 20 trade partners.