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  1. India, Russia mull ‘hydrocarbon’ pipeline

India, Russia mull ‘hydrocarbon’ pipeline

After cementing trade ties with China, energy-rich Russia is now looking to strengthen its relationship...

By: and | New Delhi | Published: November 15, 2014 1:13 AM

After cementing trade ties with China, energy-rich Russia is now looking to strengthen its relationship with India by reviving discussions on a hydrocarbon pipeline, in addition to inviting ONGC Videsh (OVL) to invest in oil and gas projects in the Russian Federation.

India and Russia have decided to form a joint working group to study laying a ‘hydrocarbon’ pipeline connecting the nations. Preliminary discussions were held in New Delhi last week, while a formal announcement is expected during Russian President Vladimir Putin’s visit to India in December, said officials privy to the development.

The two nations are yet to decide on whether they should lay a natural gas or a crude oil pipeline and, hence, decided to work out the feasibility of a ‘hydrocarbon’ pipeline.

Previously, India was considering negotiating with Russia for the extension of a $30-billion gas pipeline that Moscow plans to build to China till the Indian border. If the proposed pipeline from Russia via China’s Xinjiang province materialises, it will be among the world’s most expensive gas pipelines. The joint working group would “examine all feasible options”, an official directly involved in the negotiations told FE.

The Modi government’s intent is to bolster sourcing of oil and gas to meet the country’s rising energy demand. India is a huge importer of energy.  In FY14, its net energy imports were 6.3% of the GDP. “Without energy imports, we calculate it would have run a current account surplus of 4.6% of the GDP,” Goldman Sachs said in a recent report.

During the World Petroleum Congress held in Moscow recently, petroleum minister Dharmendra Pradhan is learnt to have discussed the possibility of the pipeline with his Russian counterpart, Alexander Novak.  India is looking to set up a pipeline from Russia, either through China or via the same route as the Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline.

During Putin’s visit to New Delhi, sources also say ONGC Videsh may further “fine tune” its talks with Russia’s Rosneft to pick up equity stakes in two blocks in East Siberia in two separate deals.

The exact size of the deals is not known but is believed to have combined worth of around $2 billion.

In one of the deals, OVL, the overseas subsidiary of India’s largest explorer ONGC, is looking at picking up a 10% stake in the Vankor fields that are producing crude oil, the source said, adding that feasibility studies are currently on. The field, which has been under production since August 2009, currently produces more than 400,000 barrel of oil per day, double the output of Barmer, India’s largest onshore field, which is operated by Cairn India.

The second deal OVL is discussing with Rosneft is to buy equity in a greenfield project, Yurubcheno-Takhomskoye. This is a discovered asset and OVL is evaluating picking up 49% stake.

The proposed two deals will bolster the asset base of OVL, whose overseas forays are a key part of India’s energy security strategy. The company, with cumulative investments abroad up to March 31, 2014, of over $22 billion, has stakes in 33 oil and gas projects in 16 countries.

In the works

Joint working group to study laying a ‘hydrocarbon’ pipeline connecting India and Russia

Options may include extension of a $30-billion gas pipeline Moscow plans to build to China

ONGC Videsh-Rosneft may ink deals for upstream projects

Indian firm studying investments in Vankor & Yurubcheno-Takhomskoye projects

Vankor fields are producing crude oil; about 400,000 barrels of oil per day

Yurubcheno-Takhomskoye is a discovered asset

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