Delhi, Moscow sign energy deal, set $30 bn trade target by 2025

India and Russia on Wednesday signed a five-year road map for cooperation in the energy sector, the centrepiece of Prime Minister Narendra Modi’s two-day visit to Vladivostok, as New Delhi looks to diversify its fuel sources from the volatile Gulf region.

The energy pact was one of 15 signed in areas ranging from cooperation in the production of spare parts for Russian or Soviet-origin Indian military equipment to infrastructure finance, besides energy cooperation, after talks between Modi and Russian President Vladimir Putin in Vladivostok. This was the 20th summit between Indian and Russian leaders since 2000 when the annual summit mechanism was formalized.

Modi arrived in the Russian Far East earlier on Wednesday, the first to the region by an Indian prime minister.

Modi thanked Putin for his support to New Delhi on the revoking of Article 370 of India’s Constitution that granted special status to Jammu and Kashmir. Modi also apprised Putin of the “false and misleading” propaganda by Pakistan, according to a PTI report.

Both India and Russia were against any “outside intervention” in matters related to any country, Modi said, in what is seen as a clear message to Pakistan, which has been trying to drum up international support for its stance.

The two countries are trying to redefine their long-standing ties that have been mainly dominated by military and civil nuclear cooperation. There has also been an effort to grow trade which at $11 billion is seen as far below potential. The two sides have set a target of $30 billion in bilateral trade by 2025 and there was discussion on increasing trade in local currencies to boost bilateral trade.

The Russian government said they agreed to explore the joint development of oil and gas fields in Russia and India, including offshore ones with energy emerging as a “new pillar of cooperation”, according to Indian foreign secretary Vijay Gokhale.

“With the signing of the road map for cooperation in hydrocarbons for 2019–24 during the summit, both sides expect bilateral cooperation in this sector to touch new heights in the next five years,” according to a joint statement by the two countries.

Modi and Putin “are determined to forge cooperation in geological exploration and joint development of oil and gas fields in Russia and India, including offshore fields. They will continue their work to develop ways of delivering energy resources from Russia to India, including a long-term agreement for sourcing Russian crude oil, the possible use of the Northern Sea Route and a pipeline system,” the statement said.

Moscow has also agreed to look at supplying coking coal from its far east, according to Indian officials. The two countries are also looking at partnerships in hydro and thermal power.

One of the pacts signed was between Russia’s ministry of energy and India’s ministry of petroleum and natural gas on the use of natural gas for transportation. Russian gas producer Novatek also signed a pact with Petronet LNG Ltd for supply of liquefied natural gas and joint development of downstream LNG business. The two leaders noted the prospects of Russia’s Rosneft-backed Nayara Energy Ltd increasing the capacity of the Vadinar refinery in Gujarat.

The energy pacts are a “major breakthrough” in relations and it is “attractive” for India to purchase fuel from Russia, Gokhale said.