India inks pact expressing interest for stake in Far East Russian oilfields; deal aims at raising crude imports to fill supply gap

New Delhi: India on Tuesday signed a non-binding cooperation agreement with Russia that reiterated interest of Indian firms in taking stake in oilfields in Far East region of the former Soviet Republic. Oil Minister Dharmendra Pradhan discussed investment opportunities when he met Igor Sechin, chief executive of Russian oil major Rosneft, here on Tuesday. “We discussed elaborately for raising oil imports from Russia,” he told reporters after the meeting. During the talks, the two sides reviewed existing stake of Indian firms in Russian oilfields such as Sakhalin-1, Taas-Yuryakh and Vankor fields. “In the presence of Minister Pradhan, the Indian consortium of four oil and gas PSUs (Bharat PetroResources Ltd, Indian Oil Corp, ONGC Videsh Ltd and Oil India Ltd) and Rosneft exchanged a non-binding cooperation agreement, reiterating their interest in participation of the Indian companies in the Eastern Cluster project of Russia,” an official statement said. [caption id=“attachment_1992039” align=“alignleft” width=“380”] Representational image. Reuters[/caption] A separate statement issued by Rosneft said the two sides “reiterated their interest in a potential participation of the Indian partners in the Vostok oil project.” Both the Eastern Cluster and Vostok project refer to the cluster of oilfields near the Vankor project in Arctic/Far East Russia. Rosneft said the Vostok project will enable development of the unique resource potential of the Arctic Cluster. “It is planned that the project will incorporate the assets of Vankor group of fields (including Vankor, Suzun, Tagul and Lodochnoe fields), Payakha group of fields, West-Irkinskiy license area as well as a number of other high-potential exploration projects in Krasnoyarsk province,” it said. By 2030, the cluster oil production might come to 100 million tons. India already imports a small quantity of oil from Russia, but is looking to raise it through a new sea navigation channel between Vladivostok and Chennai. “We are confident, we will have some deal,” Pradhan said. During the meeting with Sechin, who Indians see as Mukesh Ambani of Russia, Pradhan renewed pitch for a consortium of Indian companies led by ONGC Videsh (OVL) taking about 49 percent stake in Russia’s Vankor cluster oilfields.

India had expressed deep interest in oil and gas exploration in Russian Far East during Prime Minister Narendra Modi’s visit to Vladivostok earlier this month and Sechin’s visit was a follow up of that, officials said.

“During the meeting of Minister Pradhan with CEO, Rosneft, a detailed review of the ongoing cooperation between Indian oil and gas PSUs with Rosneft was undertaken. The developments in energy markets, including global crude oil supplies, in the light of the recent attacks on Saudi Aramco’s facilities, was also discussed. In this context, a special focus was on increase of crude oil supplies from Russia to Indian refineries,” the official statement by the Indian oil ministry said. Also discussed during the meeting was Rosneft-backed Nayara Energy reviewing an option of a two-fold increase of the refining throughput at the Vadinar refinery in Gujarat. “The first stage consortium commits to investment of $850 million towards the building of a petrochemical unit in Vadinar within two years,” it said. “The consortium is also planning to expand Nayara Energy’s retail presence, which currently has over 5,300 retail outlets across the country.” Sechin indicated Rosfnet’s readiness to intensify cooperation, aimed at strengthening of energy security in India and in supplying of high-quality feedstock and crude oil to India. “The parties agreed to intensify their cooperation aimed at the strengthening of energy security in India and supplying of high-quality feedstock and crude oil products to Indian customers. The focus was made on bilateral cooperation and the establishment of an efficient energy bridge based on the vertical integration concept. This includes participation of Indian partners in production projects and investments in refining as well as joint operations on the global and regional markets,” Rosneft said. OVL, the overseas arm of state-owned Oil and Natural Gas Corp (ONGC), may hold 26 percent stake in Suzunskoye, Tagulskoye and Lodochnoye fields —collectively known as Vankor cluster, while Indian Oil Corp (IOC), Oil India Ltd and Bharat PetroResources Ltd (a unit of Bharat Petroleum Corp Ltd or BPCL) would hold another 23 percent. Rosneft, Russia’s national oil company that owns the fields, wants to retain a majority stake and is keen to sell only up to 49.9 percent stake.

Energy-hungry India is keen on sourcing one million barrels per day of oil and oil-equivalent gas from Russia and has identified Sakhalin-3 in the Far East, Vankor in East Siberia, and Terbs and Titov oilfields in Timan Pechora region as fields for potential collaboration. But for Vankor, it has so far not been successful in its attempts.

OVL also has 20 percent stake in Sakhalin-1 oil and gas field in Far East Russia, and in 2009 acquired Imperial Energy, which has fields in Siberia, for $2.1 billion. Besides, the OIL-IOC-BPRL consortium has taken another 29.9 percent stake in a separate Taas-Yuryakh oilfield in East Siberia for $1.12 billion. The investments had taken the total outlay in Russia in that year to $5.46 billion.