ONGC Videsh Ltd. (ONGC) the largest Indian E&P Company operating overseas today signed a "Framework Agreement on Cooperation in Hydrocarbon Sector" at Delhi with M/s Sistema, the largest diversified public financial corporation in Russia and CIS, during the official visit of the President of the Russian Federation, Dmitry Medvedev to India.

Within the Agreement, the two companies agreed to consider opportunities for a potential transaction involving (i) Sistema's majority stake in JSC Bashneft and 49% stake in RussNeft, each of which owns and operates numerous fields and refining assets in Russia, (ii) ONGC Videsh Ltd.'s 100% stake in Imperial Energy Corp., which owns and operates fields in Russia, and (iii) Any other oil and gas assets which the aforesaid companies may acquire before definitive agreements are signed. The parties further agree to consider joint investments in each other's existing and future exploratory assets in certain third countries. ONGC proposes to lead a consortium of Indian oil sector PSUs to consider acquiring the stake offered by Sistema under the Agreement.

The provisions of this Agreement are intended solely as the basis for further discussions between the parties on the scope, timeline and valuation parameters of a potential transaction, and no binding commitments of any kind or nature will arise between ONGC and Sistema until the parties' execution of binding legal documentation and receipt of any necessary corporate and governmental approvals. The parties have agreed a milestone date of 30th June 2011 by which to formulate the terms for potential transaction.

ONGC Videsh Ltd, a subsidiary of Oil and Natural Gas Corporation Ltd. (ONGC), has a proven track record of mutually beneficial co-operation with the Russian Government. ONGC started its operation on the Russian oil and gas market in 2001 when it acquired a stake in 'Sakhalin-1.' In 2009 ONGC bought Imperial Energy which owned oil assets in Tomsk region, Russia, for approximately US$ 2.1 bln.

Sistema has major investments in a host of other industries in Russia and CIS including telecommunication. It has since diversified its activities in the oil & gas sector as well. Sistema has also invested in telecommunication sector in India.

Speaking on the occasion, Mr. R S Sharma, Chairman, ONGC group of companies stated that Sistema had been scouting for a strategic partner having experience in oil and gas sector and given that ONGC has a proven track record of over 50 years in the oil and gas business world-wide, the partnership should establish synergistic value to the growth plan of the two groups in the oil sector of Russia.

Issued By
Oil and Natural Gas Corporation Ltd.
Corporate Communications, New Delhi,
Phone: +91-11-23320032
Tele-Fax: 011-23357860
Mail: ongcdelhicc@ongc.co.in