Cooperation in the energy sector between India and Russia

Russia's President Vladimir Putin and India's Prime Minister Narendra Modi attend a news conference after their talks at the Kremlin in Moscow, Russia, December 24, 2015.

Energy was very much on the agenda of Prime Minister Narendra Modi when he visited President Vladimir Putin in Moscow in the run-up to Christmas, and a number of agreements were signed to deepen cooperation in oil and gas between India and Russia.

With energy security key to India attaining anything near double-digit growth and promoting itself as a manufacturing hub, Modi has set an ambitious target of increasing renewable energy capacity fivefold to 175 gigawatts by 2022.

But he has also encouraged Indian power companies to look offshore at traditional sources. Given crude oil prices at an 11-year low of about $36 per barrel, some oil and gas assets are on offer at attractive prices.

Indian Oil Corp. (IOC) and Oil India, both state run, inked a pact with Russia’s Rosneft to cooperate on hyrdocarbon exploration and production. As a first step, IOC said the companies will look at possibilities for Taas-Yuryakh Neftegazodobycha, a Lensk-based company, giving “impetus to the development of one of the largest oil assets in East Siberia”.

IOC is India’s biggest refiner and Oil India its second largest exploration company after Oil and Natural Gas Corp. (ONGC).

ONGC is also on the lookout for Russian energy assets. It inked an agreement during Modi’s visit with Rosneft for onshore cooperation as well as along Russia’s continental shelf.

In September, ONGC’s foreign arm, ONGC Videsh (OVL), announced it had taken a 15% stake believed to be worth $1.3 billion in Rosneft’s subsidiary Vankorneft. On Dec. 24, OVL and Rosneft signed a confirmation of completing the first stage in the deal.

These agreements were signed in the presence of Putin and Modi.

Vankorneft has the Vankor oil field in eastern Siberia, one of Russia’s largest, which accounts for about 4% of national production. OVL’s relationship with Rosneft dates back to 2001 when it acquired a 20% stake in the offshore Sakhalin-I oil and gas project.

At present, OVL has 36 projects around the world, and supplies about an eighth of India’s oil and natural gas.

Source: NIKKEI Asian Review