Oil India makes a splash in Russia, but won't get its hand on the money just yet

Oil India Ltd reported a strong stream of dividends from its Russian investments, but said $330 million held in its Moscow account cannot be repatriated because of Western sanctions.

For policymakers and company watchers, OIL's statement underlined two trade-offs in overseas resource deals: exposure to geopolitical and security risk, and exposure to the international financial system that enforces sanctions. While the company's dividend receipts showed that its assets are producing value, the frozen transfers showed how external policy decisions can delay access to that value.

Chairman Ranjit Rath told shareholders the company received $942 million from its Russian assets, an amount that represents over 91% of the original investment in Vankorneft and Taas-Yuryakh. He said full recovery is expected in the coming year.

The payments underline the cash yield from those fields. They have arrived even as banks and regulators restrict money movements linked to Russia. The company said repatriation of about $330 million remains stalled in its Moscow account.

At the annual general meeting, Rath described the dividend inflow as a highlight of the year. He set the receipts alongside the firm’s overseas portfolio and its plans for other projects.

Oil India is part of a consortium with Indian Oil and the Bharat Petroleum subsidiary BPRL that bought stakes in the Vankorneft and Taas-Yuryakh fields. The consortium paid a little over $2 billion for a 23.9% stake in Vankorneft and $1.2 billion for a 29.9% stake in Tass-Yuryakh.

Separately, an ONGC unit, Overseas Ventures Ltd (OVL), holds a 15% stake in Vankorneft acquired for $1.2 billion. OVL, the company said, is facing a similar repatriation problem and has roughly $350 million in dividend income blocked in Russia.

Abhijit Majumdar, Oil India’s director (finance), said dividend payouts themselves are not the issue. The problem is moving the cash out of Russia. “Our money is safe in our account with SBI account in Moscow. We are examining options (to repatriate) but banks are cagey due to the sanctions,” he said.

One option under review is routing funds through the company’s Singapore subsidiary, an approach that OVL is also considering. But the company cautioned that Singapore’s stance on Russia and Moscow’s invasion of Ukraine complicates that path.

Beyond Russia, Rath addressed another overseas exposure. He said he expects to restart development on the $20-billion Mozambique liquefied natural gas project, operated by TotalEnergies, by the end of this year. The project had been stalled because of an internal security situation in Mozambique.

The picture that emerged at the meeting is mixed. On paper, the Russian investments have returned the bulk of the initial outlay. In practice, banking restrictions have created a cash-flow barrier. The company is weighing structural workarounds, while its Mozambique stake awaits a resumption of development.