At least three Indian companies, including state-owned Indian Oil Corporation and ONGC Videsh, are in discussions for significant hydrocarbon deals to Russia.
Despite losing the first mover advantage to China, India is redoubling its energy sector engagements with Russia at a time when Western sanctions are impeding Russia’s energy ties with the West and sanction-hit hydrocarbon firms in that country are desperate to diversify their market risk.
At least three Indian companies, including state-owned Indian Oil Corporation and ONGC Videsh, are in discussions for significant hydrocarbon deals to Russia. The proposals on the anvil include the joint extraction of oil and gas from Russia’s Arctic shelf deposits. This comes close on the heels of Russia’s biggest oil company Rosneft OAO acquiring significant equity state in private sector firm Essar Oil.
India’s Ambassador to Russia PS Raghavan indicated that “it is an opportune time” for India to strike hydrocarbon deals with Russia. Deals already in the pipeline include ONGC Videsh’s talks with a Russian oil company to acquire stake in two Siberian oilfields. Significantly, after its Essar Oil deal, state-owned Rosneft, which is under Western sanctions, will emerge as the biggest shareholder in the company that operates India’s third largest oil refinery — the Vadinar refinery. So far, Essar has depended heavily on Iran to feed its 4,00,000 bpd (barrels per day) refinery in Gujarat.
IOC, India’s biggest refiner, had, in April, was reported to have bought a million barrels of medium-sour crude from Russian trader Litasco to be processed at its Panipat refinery — the first time the refining major would be handling a Russian Urals oil cargo.
The move by the Indian firms to make fresh inroads into the Russian hydrocarbon sector comes at a time when the Chinese have already laid the foundations for a future gas contract envisaging a second pipeline known as the West-Route, in addition to the East-Route deal that was signed last year between Russia and China.
“This is an opportune time (for Indian oil and gas firms) … Indian Oil and ONGC Videsh are exploring opportunities,” Raghavan said here. On May 8, a senior Russian government official had announced plans to invite Indian companies to jointly extract oil and gas from Russia’s Arctic shelf deposits. “There are plans to attract Indian companies to developing hydrocarbon deposits on Russia’s Arctic shelf,” Kremlin aide Yuri Ushakov had said. ONGC Videsh’s interest in Siberia included talks early this year for a stake in Vankor and Yurubcheno-Tokhomskoye fields. Rosneft had offered to sell 10 per cent stake in the Vankor oilfield in Siberia to ONGC Videsh and had, in September last year, sold a 10 per cent stake in Vankor to China’s CNPC for about $1 billion.
ONGC Videsh is learnt to be keen on expanding its presence in Russia as part of plans to source one million barrels per day of oil and oil-equivalent gas from the country. It has a 20 per cent stake in the Sakhalin-1 oil and gas field in eastern Russia and in 2009 acquired Imperial Energy, which has fields in Tomsk region, for $2.1 billion.
In 2014, Russia’s state-controlled oil company Rosneft signed a memorandum of understanding with ONGC, paving the way for joint projects in Russia’s offshore Arctic.