India, Russia begin talks for cooperation in oil project

Updated on Feb 17, 2020 04:04 AM IST

India is expected to host the annual summit between the two countries in October. The recent agreement on the import of oil from Russia via Novorossiysk port was signed during a visit to India by Rosneft CEO Igor Sechin. A statement issued by Rosneft said the supply of oil is expected to start by the end of 2020.

Russian President Vladimir Putin with Prime Minister Narendra Modi during their meeting on the sideline of the 11th edition of the BRICS Summit, in Brasilia, Brazil in November 2019.(Reuters File Photo)
Russian President Vladimir Putin with Prime Minister Narendra Modi during their meeting on the sideline of the 11th edition of the BRICS Summit, in Brasilia, Brazil in November 2019.(Reuters File Photo)
Hindustan Times, New Times | By

India and Russia have begun preliminary talks on the participation of Indian companies in the Vostok Oil project in Siberia. Moscow is keen to firm up the contours of an agreement in this regard by the time Prime Minister Narendra Modi visits Russia in May, people familiar with the matter said.

Cooperation in the Vostok Oil project is being seen as a follow-up to the agreement signed by Indian Oil Corporation and Russia’s state-run Rosneft Oil Company on February 5 for importing up to 2 million tonnes of oil a year, and will dovetail into New Delhi’s plans to diversify the sources of oil and gas.

“Talks between the two sides have begun, and we are hopeful that the details of an agreement will be worked out by the time Prime Minister Modi visits Moscow for the Victory Day celebrations in May,” said a person familiar with thinking on the Russian side.

“We are hoping the final agreement for India’s participation in Vostok Oil will be signed by the time President Putin comes to India for the annual summit in October,” said the person, who asked not to be named.

President Vladimir Putin invited Modi to the annual May 9 Victory Day celebrations, which commemorate the victory over Nazi Germany in World War 2, when the two leaders met on the margins of the Brics (Brazil, Russia, India, China, South Africa) Summit in Brazil last November.

India is expected to host the annual summit between the two countries in October.

The recent agreement on the import of oil from Russia via Novorossiysk port was signed during a visit to India by Rosneft CEO Igor Sechin. A statement issued by Rosneft said the supply of oil is expected to start by the end of 2020.

The statement added an important subject that figured in discussions between Sechin and petroleum minister Dharmendra Pradhan was an increase in Russian oil supplies to India.

“A separate topic of discussion was the matter of Indian companies’ participation in implementing the Vostok Oil project aimed to establish a new world-class oil and gas province on the North of Russian Krasnoyarsk Territory. As Dharmendra Pradhan said, the Indian side has already made a principal decision to participate in the project,” the statement said.

“In order to negotiate the terms of Indian companies’ entering Vostok Oil in the shortest time possible the parties agreed to create a regular working group of representatives of Russian and Indian companies,” it added.

Given the robust status of defence and military ties, especially the recent $5.4-billion deal for S-400 air defence systems and a proposed contract for 200 Kamov helicopters, Russia has decided to focus on strengthening trade with India during 2020, including in oil and gas.

Vostok Oil project’s advantage lies in its proximity to the Northern Sea Route, which can be used to supply crude to European and Asian markets.

Rosneft has been cooperating with India’s oil companies in areas ranging from production to refining and marketing. Since 2016, ONGC Videsh, Oil India Limited, Indian Oil Corporation and Bharat PetroResources have owned 49.9% of Vankorneft, the Rosneft subsidiary in Krasnoyarsk that is developing the Vankor oil and gas field, the largest reserves discovered in Russia in 25 years. The Vankor area is part of the Vostok Oil project.

Other ongoing joint projects of Rosneft and Indian firms include Sakhalin-1, Taas-Yuryakh, Far East LNG, and Nayara Energy.

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