India, Russia oil ties with $4billion deals


NEW Delhi: Leading state-run oil companies on Wednesday signed a clutch of deals potentially worth over $4 billion once all of them are completed for acquiring a stake in Russian major Rosneft’s most promising oilfields in Siberia, adding commercial depth to the Soviet-era strategic ties between India and Russia.

The deals put oil into the main frame of bilateral engagement — so far dominated by defence and strategic issues and show New Delhi’s resolve to push big-ticket oilfield acquisitions abroad when low crude prices are making life difficult for operators and China feels hamstrung by economic slowdown.

For Rosneft, Russia’s biggest producer and the world’s largest publicly-traded oil company, the deals bring funds for developing new fields and paying off part of massive debt raised to fund acquisition of TNK-BP, a vertically integrated oil company, in 2013.

With sanctions blocking access to western funding, Kremlin-backed Rosneft is looking east where India especially looks attractive, both in terms of market for crude and funds with 6-7% economic growth rate and 7% rise in annual fuel demand.

An indication of Moscow’s reliance on India in times of sanctions came from the fact that Rosneft chairman Igor Sechin, considered close to President Vladimir Putin, has been camping in the country for the last two days to see the deals with state-run companies and Essar Oil of the Ruias with which it is working out a separate refinery stake and oil supply deal through. Indeed, New Delhi was one of the first stops for Sechin on March 25, 2014, after the sanctions were imposed.

In the first deal, IndianOil, Oil India and a unit of BPCL agreed to take 29.9% in Tas-Yuryakh oilfield in east Siberia for $1.3 billion. The consortium also signed heads of agreement for taking a 24% stake in Vankor field, also in east Siberia, for over $2 billion and pay another $180 million as its share of future capex. ONGC Videsh, the overseas arm of ONGC, signed an MoU to raise its total stake in Vankor to 26% for by acquiring additional equity at a cost of $925 million. ONGC Videsh had in September last year bought 15% in the field for $1.3 billion.

The two sides also agreed to examine prospects of joint trading and possibility and long-term crude supply contracts. The IOC-led consortium signed another MoU for exploration, taking a stake in developing the Vankor cluster fields of Suzunskoye, Tagulskoye and Lodochnoye.

While the IOC-OIL-Bharat PetroResources deal for a 29.9% stake in Tass-Yuryakh oilfield is a concluded agreement, the consortium’s Vankor deal is an initial pact and a sale purchase agreement is yet to be concluded. Similarly, OVL’s increase in stake in Vankor too is yet to be concluded. Rosneft had last year sold a 20% stake in Tas-Yuryakh to BP for $750 million. The Russian firm will hold 50%.



Be Part of Quality Journalism

Quality journalism takes a lot of time, money and hard work to produce and despite all the hardships we still do it. Our reporters and editors are working overtime in Kashmir and beyond to cover what you care about, break big stories, and expose injustices that can change lives. Today more people are reading Kashmir Observer than ever, but only a handful are paying while advertising revenues are falling fast.



Observer News Service

Leave a Reply

Your email address will not be published.