India signed a pact with Russia for joint exploration of hydrocarbons in Eastern Siberia in December when Narendra Modi visited the country
New Delhi: A plan by Indian oil marketing companies led by Oil and Natural Gas Corp. Ltd (ONGC) to acquire a substantial stake in Vankor oil field in Siberia, operated by Russian energy giant Rosneft OAO’s subsidiary Vankorneft, will come up for discussion when oil minister Dharmendra Pradhan meets Rosneft chairman Igor Sechin in New Delhi on Tuesday, according to two people familiar with the development.
The deal, if inked, will enable ONGC, India’s largest oil and gas exploration and production company to raise its stake in Vankorneft from 15%, for which its overseas arm ONGC Videsh Ltd (OVL) signed a deal with Rosneft in September last year.
The total stake in Vankorneft for the Indian consortium could go as high as 49%.
The possible stake purchases in Rosneft’s other assets are also likely to be discussed in Tuesday’s meeting, said one of the two people cited earlier, on condition of anonymity.
“When you are in the market, you are open to all possible options. We will get to know after Tuesday’s discussions if a deal will happen immediately," said the person, adding that the extent of stake purchase will also be decided on Tuesday.
OVL has been eyeing a 26% stake in Vankorneft (including a 15% stake upon agreed in September last year) and Indian Oil Corp. Ltd, Oil India Ltd and Bharat Petro Resources Ltd, a unit of Bharat Petroleum Corp. Ltd, another 23.9%, all for about $2.9 billion, according to a report by Press Trust of India last week.
Emails sent to ONGC, Rosneft, Indian Oil and Bharat Petroleum remained unanswered at the time of going to print.
As part of its efforts to diversify its energy basket, India signed a pact with Russia for joint exploration of hydrocarbons in Eastern Siberia in December when Prime Minister Narendra Modi visited the country.
Many energy firms, which are planning to offload stakes in energy assets due to sustained low oil prices, are looking at India as an investor.
India, which imports 70-80% of its crude oil needs, wants to buy assets abroad in a bid to ensure a steady flow of crude unaffected by price volatility.
Explorer Oil India and refiner Indian Oil are Rosneft’s partners in East Siberia exploration, the Russian company had said last December.
Vankorneft produced 22 million tonnes (mt) of oil in 2014, 3% more than what it produced a year ago.
“India is looking to diversify its energy import basket, but since oil transportation from Russia could be a problem, India may need to look at a swap arrangement," said Uma Purushothaman, assistant professor of international studies at the Central University of Kerala.
The move, which comes at a time of uneasy ties between Russia and the West, is a reaffirmation of India-Russia ties, she added.