The October summit has assumed special importance for its emphasis on energy cooperation as the Russian oil companies and the Russian government are keen to seek the extensive cooperation of the Indian public sector and the private sector companies for participation in the Russian oil fields as also in equity participation in the Russian oil companies. Russia needs the support of both China and India in the present geo political situation in view of western sanctions over Ukraine and the steep fall in the prices of oil and other commodities to the great discomfort of the Russian economy.

While In the recent months, there are signs of pick up in the Russian economy, the situation is still grim and the Russian government is determined to take the expansion of the country’s oil and gas fields development in association with the other countries which have resources as also expertise. Indian oil companies are cash rich and the ONGC has been dealing with the Russian oil fields for more than a decade. The Indian private sector companies like the Reliance and Essar are also highly rated by the Russian companies for collaboration.

Russian government has announced its privatization programmes and this offers a big opportunity to the Indian public and private sector firms to collaborate with the Russian companies by purchasing equity stakes in the giant companies. Both the Indian government and the big private sector companies have been assessing the potential and taking follow up action. In view of Russian experience in dealing with the Indian companies and the problems with the European and US companies because of sanctions, President Putin has given big focus on Indian participation and investments in the Russian oil industry as a major component of his bilateral summit strategy.

The ambitious gas pipeline project from Russia to India is being persued with urgency in view of the energy security of both the countries Only in September this year, as a part of the preparation for the bilateral summit, India and Russia launched an industry level working group with the participation of both Russian and Indian companies. The details are being made ready and the concrete programme for investments by the Indian companies in the Russian companies are a part of that. Indian oil companies are looking at investment options in Russian oil fields in Baltic and Arctic regions which are being opened for foreign participation.

Already, the Indian cabinet has granted approval to a consortium of Indian energy companies to buy stakes in two Russian oilfields for more than US$3 billion. as a part of India’s bid to expand its oil assets abroad.

Indian petroleum ministry has been most active in pursuing the course of Indian collaboration with the Russian companies in the energy sector. Petroleum Minister Dharmendra Pradhan has been in continuous touch with his Russian counterpart and after clearance by the Prime Minister, ONGC last month agreed to buy an additional 11 per cent stake in Vankorneft, owner of the Vankor oil and gas fields in Siberia, Rosneft’s second largest by output. Once the transaction is completed, ONGC Videsh, the overseas arm of ONGC, will have a 26 per cent stake in JSC Vankorneft.

Russian Government wants to make a big success of its oil industry privatization programme but there are some restrictions also. Foreign investors are allowed to participate on condition that they register their subsidiaries in Russia and control over the strategic enterprises will remain with the Russian state. At present, Russia is having an expanding relationship with China in the energy sector and India is coming next for collaboration., The Russian expectation is that this privatization programme will bring one trillion roubles US$ 12.5 billion) in the state coffers within a period of two years .Much will depend on China and India’s participation.

For India, strengthening its energy security is of great significance and it has been an important constituent of India’s bilateral relationship with Russia. Accordingly, India is keen to secure long term supplies of hydrocarbons and diversification of imports from Russia through LNG supplies. In the hydrocarbon sector, Indian chamber Confederation of Indian Industry (CII) has assessed that, apart from existing investments in the oil and gas sectors, there is considerable scope for corporate investments in Russia. The Indian private sector, according to CII, considers Russia a country pf great opportunity and is keen to work with the two governments to develop sector partnerships which will benefit both economies. That way, the Goa summit’s prime agenda of energy collaboration has the full support of both Indian public sector and the private companies. (IPA)