India's Stake in Sakhalin-1: Opportunity After Putin's New Decree

Russian President Vladimir Putin has signed a new decree that could allow foreign investors, including ExxonMobil, to regain their stakes in the Sakhalin-1 oil and gas project. The announcement came on the same day Putin met Donald Trump in Alaska for a summit discussing investment, business collaboration, and peace in Ukraine.

This move is a follow-up to Putin’s October 2022 decree, which ordered the seizure of Sakhalin-1 and transferred control to a Rosneft subsidiary. At that time, ExxonMobil exited with a $4.6 billion write-off, making it the only non-Russian investor to fully quit the project.

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🔎 What Does the New Decree Mean?

• The decree establishes a legal framework for foreign investors to reapply for ownership rights in Sakhalin-1.

• Conditions include:

  • Supporting efforts to lift Western sanctions.

  • Supplying foreign-made equipment necessary for the project.

  • Transferring funds into Sakhalin-1 project accounts.

• This is a significant policy shift, as it provides a possible re-entry route for companies like Exxon, though Western sanctions remain a major barrier.

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🇮🇳 Implications for India (ONGC Videsh)

India’s ONGC Videsh (OVL) holds a 20% stake, which Russia allowed it to retain after 2022. For India, this new decree has several important implications:

1. Stake Security – Confirms ONGC’s position as a stable, trusted partner.

2. Potential Expansion – If Exxon or Japan’s SODECO reduce their roles, India could negotiate for a larger share.

3. Energy Security – Higher production and collaboration could secure discounted long-term oil supplies for India.

4. Strategic Positioning – Strengthens India’s presence in Russia’s energy sector amid global realignments.

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📊 Possible Scenarios for India’s Stake (Next 2–3 Years)

🟢 Best Case: Major Gain

• Exxon (30%) exits permanently.

• Japan’s SODECO (30%) reduces stake under Western pressure.

• India’s ONGC could increase its stake to 30–40%.

• Outcome: Stronger influence, more energy security, cheaper supply deals.

🟡 Likely Case: Moderate Gain

• Exxon does not return, Japan partially stays.

• India increases stake modestly to 25–30%.

• Outcome: Incremental supply security, stable long-term presence.

🔴 Worst Case: No Gain

• Exxon and Japan rejoin under the decree.

• India remains at 20% stake, with no expansion.

• Outcome: Stable but limited role, possible exposure to sanction-related risks.

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⚖️ Final Outlook

The decree represents a strategic opportunity for India. While the path for Exxon or Japan’s return remains unclear due to sanctions, India’s position is unique: it has maintained operations, continued energy trade with Russia, and is seen as a reliable partner.

• Most Probable Outcome: ONGC stake rises to ~25–30%.

• Best Case: Stake expands to 30–40%, giving India a stronger role in energy geopolitics.

• Worst Case: Stake remains 20%, with stable but limited influence.

👉 Bottom line: Putin’s decree strengthens ONGC’s standing in Sakhalin-1 and opens doors for India to potentially expand its role, ensuring long-term energy security and deeper strategic ties with Russia.