Written by Sukalp SharmaNew Delhi | Updated: September 18, 2025 07:43 PM IST 4 min readDividend payments received by ONGC Videsh (OVL), Oil India (OIL), Indian Oil Corporation (IOC), and Bharat Petroleum Corporation (BPCL) arm Bharat PetroResources (BPRL) from their stakes in Russian upstream oil projects are getting deposited in their bank accounts in Moscow with no effective mechanism to repatriate the money or use it in bilateral trade between India and Russia, according to sources in the know. (Credit: Unsplash)Indian public sector oil companies’ stuck dividend income in Russia is estimated to have grown to nearly $1.4 billion due to international payment channel-related restrictions following Russia’s February 2022 invasion of Ukraine. Dividend payments received by ONGC Videsh (OVL), Oil India (OIL), Indian Oil Corporation (IOC), and Bharat Petroleum Corporation (BPCL) arm Bharat PetroResources (BPRL) from their stakes in Russian upstream oil projects are getting deposited in their bank accounts in Moscow with no effective mechanism to repatriate the money or use it in bilateral trade between India and Russia, according to sources in the know.OVL, the overseas investment arm of Oil and Natural Gas Corporation (ONGC), holds 20 per cent stake in the Sakhalin-1 project and 26 per cent in the Vankor project. The consortium of IOC, OIL, and BPRL has 23.9 per cent share in Vankor and 29.9 per cent in the Taas-Yuryakh project. Close to $1 billion of the stranded dividends belong to the consortium of IOC, OIL, and BPRL, as per industry estimates. Around $400 million in dividends belonging to OVL are also stuck.The dividend income is being credited into their bank accounts in roubles. The bank in Russia where the money is accumulating is understood to be the Commercial Indo Bank (CIBL), an affiliate of the State Bank of India (SBI). The matter has been taken up time and again by the Indian companies with their Russian partners over the past three years. It has also featured in government-to-government discussions between New Delhi and Moscow, but a resolution is still awaited due to various complications arising from Western sanctions on Russia’s financial and its energy sectors.Soon after the war in Ukraine broke out, a number of major Russian banks were banned from the Society for Worldwide Interbank Financial Telecommunication (SWIFT) financial transaction processing system, seriously constricting Moscow’s ability to access the global payments system. Russia also restricted repatriation of US dollars out of the country in a bid to curb foreign exchange volatility.With the money stuck in Russia, the only viable options would be to use it for payments there, increase investments in Russia, and fund operational and capital expenditure requirements of existing projects, according to executives with the Indian oil companies. However, the dividend payments being received are after deduction of operational expenses and there is no plan at present to invest more capital into the ongoing projects. Also, the companies are currently not exploring investments in any new project in Russia, which leaves using the money for payments as the only feasible option.While theoretically, the money can be used to partly pay for India’s crude oil purchases from Moscow. But according to a senior official with one of the consortium members, it is a proposition fraught with multiple challenges. Firstly, while IOC and BPCL do buy Russian oil, OVL and OIL do not. Secondly, the investments in Russian projects are through special purpose vehicles registered in overseas territories like Singapore.This means that any payment dealing with Russian oil in this case would also come under jurisdiction of overseas territories, and not just Russia and India. It is worth noting here that there are various Western sanctions against Russia and its energy sector. Therefore, cross payments for Russian oil using this dividend income could end up becoming an extremely complex exercise from taxation and accounting standpoints. The companies have been seeking the opinion of legal and international accounting experts to work a way out.Story continues below this adFrom 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 three years, 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.Sukalp Sharma is a Senior Assistant Editor with The Indian Express and writes on a host of subjects and sectors, notably energy and aviation. He has over 13 years of experience in journalism with a body of work spanning areas like politics, development, equity markets, corporates, trade, and economic policy. He considers himself an above-average photographer, which goes well with his love for travel. ... Read More© The Indian Express Pvt LtdTags:OilRussia