New Delhi: Indian oil companies are exploring the possibility of buying a stake in Russian energy giant Rosneft OJSC which is reportedly looking to sell a 19.5% stake in the company, oil minister Dharmendra Pradhan said on Thursday.
Indian companies are already in the process of buying stakes in two oilfields operated by Rosneft—the Tass-Yuryakh oilfield and Vankor oilfield in Siberia, as Russia seeks to monetize the assets of the state-owned company, the world’s largest publicly traded oil company by output.
The decline in global oil prices is forcing Russia to sell stakes in the company to raise resources. Prime Minister Narendra Modi, who left for Uzbekistan on Thursday for a Shanghai Cooperation Organization (SCO) meeting is likely to meet Russian president Vladimir Putin on Friday.
“Rosneft is offering it’s equity in the market. Indian energy companies are examining if they could take some of the equity that Rosneft is divesting,” petroleum minister Dharmendra Pradhan told reporters. An email sent to Rosneft on Thursday evening remained unanswered at press time.
Indian firms are in the process of acquiring oil and gas field assets worth over $5 billion in Russia. While ONGC Videsh Ltd is raising its stake in the Vankor field from 11% to 26%, Indian Oil Corp., Oil India Ltd and Bharat PetroResources Ltd are together taking another 23.9% in the same field, taking the total Indian holding in the asset to 49.9%. This asset currently produces 20,000 barrels of oil per day (bopd) with peak production of 100,000 bopd expected by 2021, according to Indian Oil Corp.
According to Pradhan, Indian firms’ deals to buy 49.9% stake in the Vankor and about 30% in Taas-Yuriakh would cost about $5-6 billion. The minister said Indian companies are also looking at investing in the Yamal liquefied natural gas project in Siberia.
Reuters said on Thursday that Moscow plans to sell stakes totalling 19.5% in Rosneft as part of a wider privatisation plan for 2016 to raise about 650 billion roubles ($10 billion).
During his visit to Russia from 16-17 June to represent India at the St Petersburg International Economic Forum, Pradhan met Rosneft’s chief executive Igor Sechin and Gazprom chief executive officer Alexey Miller and discussed ways to broaden co-operation between Russian and Indian energy companies. He also briefed them about investment opportunities in the Indian hydrocarbon sector.
“Globally, all hydrocarbon companies have been diversifying their asset base to add reserves and to diversify risks. It is prudent for Indian companies to add hydrocarbon reserves from other geographies too” said Kalpana Jain, Senior Director, Deloitte in India.