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India may invest in major Russian oil project
India’s strategy of diversifying its energy supply portfolio could see its state-run firms enter a major new upstream project in Russia
COMMENTARY
WHAT:
Rosneft claims India has decided in principle to invest in Vostok Oil.
WHY:
Rosneft needs investors for the project and India needs to diversify its import basket.
WHAT NEXT:
Investing in Russian
oil supplies is part of India’s wider strategy to reduce its Middle Eastern exposure.
INDIA’S quest to diversify its oil supplies con- tinued last week, with Russia’s state-run Rosneft announcingonFebruary5thattheSouthAsian giant had agreed in principle to invest in a major new Arctic oil project.
Rosneft has been trying since early 2019 to drum up support among international inves- tors for Vostok Oil, which comprises a group of developed and undeveloped fields in Russia’s far north. Company CEO Igor Sechin has claimed the project could produce 50mn tonnes per year (1mn barrels per day) during the first phase of development, and double that amount under a second phase. This would help Russia compen- sate for falling output at mature fields further south.
Sechin held talks in New Delhi last week with Indian Minister of Petroleum and Natu- ral Gas Dharmendra Pradhan. During his stay, Rosneft struck a deal to supply up to 2mn tpy (40,000 bpd) to Indian Oil Corp. (IOC). Accord- ing to Rosneft, the two sides also discussed the involvement of Indian companies in “a project to create a new world-class oil and gas province in the north of Russia’s Krasnoyarsk region: Vostok Oil.”
The company added: “As stated by Dharmen- dra Pradhan, the Indian side made a decision in principleonparticipation[in]theproject.”
As of press time, the Indian government has not confirmed taking this decision. However, such an agreement makes commercial and stra- tegic sense given rising tensions in the Middle East – a region that continues to account for most of India’s oil imports.
Russian allure
Vostok Oil’s principle asset will be the undevel- oped Paiyakhskoye field, estimated to contain up to 8.8bn barrels of recoverable oil. Paiyakhskoye is operated by Neftegazholding (NGH), a pri- vate company led by former Rosneft president Eduard Khudainatov and widely believed to be a Rosneft affiliate. It will also include Rosneft’s Vankor oilfield, which has been flowing oil for more than a decade, as well as the compa- ny’s undeveloped Suzunskoye, Tagulskoye and Lodochnoye fields and the West-Irkinsky explo- ration block.
After initially reaching out to Japanese inves- tors, Rosneft has focused on attracting part- ners from India. State-run Oil and Natural Gas
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