India and Russia have a long-standing partnership when it comes to large projects. Soviet oil and gas experts had helped ONGC strike Bombay High in the Arabian Sea in the 1960 and Soviet technology boosted India’s refining sector in 1960s and 1970s. More recently, some of the large projects have emerged as the shining example of India and Russia’s commitment to a mutually beneficial cooperation
By Vivek Ratnakar, eGov Bureau
Bileteral trade and investment have been the cornerstone of India-Russia bilateral relationship for the past seven decades, which received additional impetus by the signing of the “Declaration on the India-Russia Strategic Partnership” in October 2000 and was further elevated to the level of a “Special and Privileged Strategic Partnership” in December 2010. India and Russia in December 2014 set a target to increase two-way investment to USD 30 billion by the year 2025. With concerted efforts of both the countries, this target was achieved in 2017 itself, thus investment target was revised from USD 30bn to USD 50bn by 2025 during the 19th Annual Bilateral Summit in October 2018.
Given the huge potential of increasing investments in both the countries, the Russian Ministry of Economic Development launched a ‘Single window Service’ in October 2018 to facilitate hassle-free investment by Indian companies to achieve mutual trade and investment target. Some of the key priority sectors identified for focused interaction included hydrocarbons, pharmaceuticals, mining, fertilizers, heavy engineering, gems and jewelry, chemicals, fertilizers and agriculture and food processing industry. Similarly, India took some concrete steps to facilitate Russian investments under its “Invest India” initiat
ive. Russia Plus is a fructification of Prime Minister Narendra Modi’s commitment to set up a dedicated Russian desk to promote Russian investments in the country to take forward St Petersburg vision statement that seeks to open new vistas of economic engagement. Russia Plus, which works within the remit of Invest India – the investment promotion and facilitation agency of the Indian government, is a one-stop solution for investors that provides handholding support including business advisory, policy guidance, location assessment, assistance with regulatory approvals, issue redressal and expansion support. Both the countries are working together “to explore joint projects for productive, efficient and economic use of natural resources in each other’s country through application of appropriate technologies while ensuring affordable environment friendly utilization of natural resources”.
Some of the large projects undertaken by India and Russia underscore their growing importance for both the countries to offer immense opportunities for cooperation. While widening of energy cooperation between India and Russia takes into account India’s interest in Russian energy assets, including natural gas, as well as in implementation of prospective joint projects in the field of renewable energy sources, the civil nuclear cooperation between India and Russia is an important component of strategic partnership contributing to India’s energy-security and its commitments under the Paris Agreement on Climate Change.
India and Russia have a longstanding partnership when it comes to large projects. Soviet oil and gas experts had helped ONGC strike Bombay High in the Arabian Sea in the 1960 and Soviet technology boosted India’s refining sector in 1960s and 1970s. More recently, some of the large projects that have emerged as the shining example of India and Russia’s commitment to a mutually beneficial cooperation include:
Sakhalin-1 oil and gas project in Russia started oil and gas flow at it first oilfield Chayvo in 2005 in the presence of the then Indian Petroleum Minister Mani Shankar Aiyar and Russian Energy Minister Viktor Khristenko. Describing this as an important development in the annals of long lasting friendly relationship between India and Russia, Aiyar said that his visit to the remote far east areas of Russia was also significant as India had its largest investment overseas in this project. This marked an important achievement towards securing India’s energy security as production from the field was expected to last for over 30 years.
A year later, India brought home the first consignment of crude oil from Sakhalin-1 oil field in Russia, in which ONGC Videsh Ltd bought a 20 per cent stake in 2001. It not only marked the arrival of crude oil from equity oil investment but also opened up a new source/route for crude oil. Today, Indian PSUs have jointly invested USD 15 billion in picking up stakes in Russian oil and gas projects like Sakhalin-1. ONGC Videsh Ltd also bought Imperial Energy a few years later and has recently invested in Vankorneft and TasYuryah along with Indian Oil Corp (IOC), Oil India Ltd and Bharat Petro Resources Ltd (BPRL). In return, Russian firm Rosneft bought a majority stake in Essar Oil for USD 12.9 billion.
In the biggest ever overseas acquisition by any Indian company, a consortium of Indian companies led by ONGC Videsh (OVL) acquired a 49.9 per cent stake in Russia’s Vankor cluster oilfields owned by Russia’s oil giant Rosneft at $4.22 billion.
Speaking at a conference on ‘India- Russia in 21st Century’ in September 2018, former Petroleum Minister of India Dharmendra Pradhan said, “Today, Russia is our largest investment destination in the oil and gas sector. I believe that our timetested relationship has no expiry date. Russia will always be a priority in India’s foreign and energy policy and both our countries will remain as a role model for global communities.”
Vankor Cluster Oilfields Project
In the biggest ever overseas acquisition by any Indian company, a consortium of Indian companies led by ONGC Videsh (OVL) acquired a 49.9 per cent stake in Russia’s Vankor cluster oilfields owned by Russia’s oil giant Rosneft at USD 4.22 billion. The Vankor cluster includes three fields — Suzunskoye, Tagulskoye and Lodochnoye — in the north of the Krasnoyarsk territory in immediate neighbourhood of the Vankor field. It is the second largest field by production in Russia, which accounts for 4 per cent of the country’s total oil produce.
In October 2016, OIL, IOC and BPRL acquired another 29.9 per cent in the Taas Yuryakh block for USD 1.149 billion. In the past three years, pushed by the Russian acquisitions, India has earned oil and gas assets to the tune of 15.8 MTOE abroad. “In Vankor, we had acquired 26 per cent by paying USD 2 billion. The acquisition cost came to as low as USD 3.5 per barrel, making it one of the most economically attractive deals for OVL,” an ONGC official was quoted as saying by Business Standard newspaper.
According to a Rosneft statement in 2017, a total of 88 wells were put into commercial production in the Vankor cluster, including 57 production wells, 27 intake wells and four water supply wells. Selling stake in oilfields brought oil-rich Russia lot of cash, which was useful in dealing with hardship due to sanctions imposed by the US.
ONGC Videsh Limited, the overseas arm of Oil and Natural Gas Corporation (ONGC), the flagship National Oil Company of India, acquired the group on January 13th, 2009. According to the group website, since 2007 Imperial Energy has constructed 366 km of pipeline infrastructure connecting its fields to the Transneft pipeline system. The completion of pipelines enabled the Group to transport its oil to both domestic and export markets.
Imperial Energy operates in Tomsk region of Western Siberia, Russian Federation. Western Siberia is the most prolific oil-producing region in Russia with some of the world’s largest oil fields. The actual oil production in Imperial Energy Group in year 2018 was 216.4 thousand tons. In 2019, it is planned to produce 216.0 thousand tons of oil from the fields of Imperial Energy.
LLC Rus Imperial Group is a part of Imperial Energy Group and is a 100%-owned subsidiary of ONGC VIDESH LIMITED, an overseas branch of ONGC, Indian National Oil and Gas Company. LLC Rus Imperial Group was founded in 2006 with the purpose of providing prompt, high-quality and cost-efficient oil production related services (mostly well drilling and workover) in Siberian region. The group has been playing a constructive role when it comes to strengthening India-Russia relations. The group organised the International Yoga Day celebrations in Russia as a part of celebration on the square of musical “Fountain of Youth” in 2018. Imperial Energy Group was also the initiator and the main sponsor of the Second Festival of Indian Culture that took place from October 6 to October 8, 2017. Such events traditionally attract many viewers and participants, which is a great proof of interest towards Indian culture and helps further deepen people to people contact.
Reliance Sibur Project
Reliance Industries (RIL) and Russian rubber giant Sibur joined hands in 2012 to forge a partnership to set up South Asia’s first butyl and halogenated butyl rubber production facility at Jamnagar, India at USD 450 million and having a world scale capacity of 120,000 metric tonnes per annum. Reliance Sibur Elastomers Private Limited (RSEPL), a joint venture wherein Reliance holds 74.9 % stake and SIBUR owns 25.1%, was conceptualised keeping in view that India is the world’s fourth largest consumer of elastomers (a type of polymer) after China, the US and Japan, and demand in China and India is growing at a faster rate than in America where it remains stable. According to the company’s website, the regular butyl rubber plant commissioning is expected by mid 2019 followed by halo butyl (Chlorobutyl and Bromobutyl swing capacity) plant by end 2019.
Press Information Bureau, Government of India, Indian Embassy in Moscow, Economic Times, Invest India, Business Today