MOSCOW (TIP): Russia’s decision to open up its oil and gas sector to Indian companies will significantly boost bilateral trade and the two sides are negotiating on some more acquisitions and projects in the hydrocarbons sector, India’s envoy here PS Raghavan has said.
He said Russia considers its huge oil and gas reserves as strategic resources and is allowing Indian firms “extensive exposure” to them in sync with close bilateral ties.
“This is really a rush by India into Russia’s hydrocarbons sector,” he told PTI.
He said Russia’s decision to open up its oil and gas sector to Indian companies will significantly boost bilateral annual trade which is currently around $10 billion.
A number of deals were struck between Indian and Russian oil firms during Prime Minister Narendra Modi’s visit here last week.
The deals sealed in the oil sector include ONGC Videsh Ltd buying a 15 per cent stake in Russia’s Vankorneft oil field for close to $1.3 billion. Vankorneft is Russia’s second biggest oil field and is owned by oil behemoth Rosneft.
India, considered one of world’s fastest growing energy markets, has been eyeing greater access to major gas and oil exploration projects in Russia and central Asian countries.
Raghavan said New Delhi had pressed Russia to open its oil and gas sector to Indian companies during summit talks between President Vladimir Putin and Modi in December last year and the Russian side now has heeded to the request.
“Russia is a major hydrocarbon power. We are a major hydrocarbon consumer. Our energy security depends on hydrocarbons. So there was a conscious decision that India should increase its footprint in Russia’s hydrocarbons industry,” Raghavan said. He said ONGC Videsh Ltd is exploring more acquisitions in Russian oil fields besides working on some other proposals.
“Russia has been very careful in its process of disinvestment in the oil industry as it considers oil as a strategic resource. It has been very careful in its disinvestment,” said Raghavan. Sounding confident of Indian companies in oil and gas sector expanding their operation in Russia, the envoy said economic relations between the two countries are on an upswing which is going to boost bilateral trade volume significantly.
Asked about the amount of possible investment Indian companies were planning to make in Russia’s hydrocarbons sector, he said negotiations are underway on various proposals and that it was difficult to put a specific number.
Referring to four deals and agreements finalized during Modi’s visit, he said these are examples of “extensive exposure” to Indian companies to Russia’s hydrocarbons sector.
India is the the third largest oil importer after the US and China, while Russia is one of the top oil producers globally and has huge reserves of natural gas.
Russia’s economy has been hit hard by sanctions by the West following annexation of Crimea and Putin is keen to enhance economic engagement with time-tested ally India.
Besides the deal by OVL to pick up 15 per cent stake in Vankor oil field owned by Rosneft, Oil India Ltd and Indian Oil Corporation signed a non-binding agreement with the Russian oil behemoth setting a time-frame for finalising a pact to pick up stakes in Taas-Yuryakh Neftegazodobycha oil field, which is another major oil field in Siberia.
Raghavan said Essar has also “concluded some details of a deal” under which it will pick up 10 million tonnes of crude from Roseneft.
Roseneft will pick up 49 per cent stakes in India’s second largest oil refinery in Vadinar in Gujarat. As per the deal, crude oil from Russia will be refined at Vadinar refinery.
Raghavan said GAIL and Gasprom have struck an agreement for supply of LNG for a long term period beginning 2017.