Published by Global Banking & Finance Review®
Posted on December 8, 2025
2 min readLast updated: January 20, 2026
ONGC retains its 20% stake in Russia's Sakhalin-1 by contributing to the abandonment fund in roubles, using frozen dividends amid sanctions.
By Nidhi Verma
NEW DELHI, Dec 5 (Reuters) - India's Oil and Natural Gas Corp will pay into Russia's Sakhalin-1 oil and gas field abandonment fund in roubles, using Indian companies' frozen dividends to retain its 20% stake in the project, three sources familiar with the matter said.
ONGC Videsh Ltd, the overseas investment arm of India's top explorer ONGC, and other state-run Indian companies have not been able to repatriate about $800 million in dividends from stakes in Russian energy assets due to sanctions, the industry sources said.
Ahead of Russian President Vladimir Putin's visit to New Delhi this week, the Indian companies agreed to give ONGC Videsh a loan from those stuck dividends so it can make a contribution to the abandonment fund, the sources added.
"ONGC would not like to respond to market speculations," the company said in response to a Reuters email.
Other Indian companies did not respond to Reuters' requests for comment, nor did Rosneft, whose Sakhalinmorneftegaz-shelf subsidiary now operates Sakhalin-1.
An abandonment fund is used for decommissioning activities to ensure that wells are properly shut in and that the process will not affect the environment.
A raft of Western sanctions, imposed over Russia's invasion of Ukraine in February 2022, has made it difficult for ONGC Videsh to transfer funds to Russia in dollars, and payment in roubles requires approval from the Russian authorities.
ONGC Videsh has been trying to retain its 20% stake in the Sakhalin-1 project since October of that year, when Putin ordered the seizure of the project and allowed the Russian government to decide foreign investors' ownership rights in the project.
Russia has allowed ONGC Videsh to contribute roubles to the fund using the pending dividends of Indian companies, said the sources, who spoke on condition of anonymity as they are not authorised to speak to the media.
In August Putin signed a decree that allowed foreign investors to regain shares in the Sakhalin-1 oil and gas project.
The decree stipulated that foreign shareholders must undertake actions to support the lifting of Western sanctions if they want to regain their share.
They must also conclude contracts for supplies of necessary foreign-made equipment to the project, and transfer funds to Sakhalin-1 project accounts.
(Reporting by Nidhi Verma; Editing by Andrew Heavens)
An abandonment fund is a financial reserve set aside for decommissioning activities, ensuring that oil and gas wells are properly shut down and that the process does not harm the environment.
Dividends are payments made by a corporation to its shareholders, typically from profits. They can be issued in cash or additional shares and represent a portion of the company's earnings.
Sanctions are restrictive measures imposed by countries or international bodies to influence or penalize a nation or entity. They can include trade restrictions, asset freezes, and financial penalties.
A stake in a project refers to an ownership interest or share in that project. It represents the proportion of the project that an investor or company owns.
A foreign investor is an individual or entity that invests capital in a country other than their own. They seek opportunities for profit and may invest in various sectors, including real estate and businesses.
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