Rosneft is the world’s largest publicly traded oil company and its purchase of 98 per cent of Essar Oil’s 20 million tonne per annum refinery along with associated port and fuel retail network, has given a definite signal to the global oil market that India has emerged as one of the most attractive markets for foreign investment in oil industry. Rosneft’s business plans have the potential of turning India into a major hub for exporting oil products refined in the Indian refineries through imported oil. Rosneft is planning to make optimum use of Essar refinery to process crude oil from other countries including Venezuela and the future plans indicate the possibility of making use of India as the biggest outfit of Rosneft outside Russia, along with China.

What is significant is that Indian refineries have sophisticated technology and the state owned refineries have been constantly upgrading the technology and the refining process. The takeover of Essar will give the Russian major the golden opportunity to process in Indian refineries crude oil from other countries also which need sophisticated technology. That way, through Rosneft, India will be in a position to refine crude oil from a number of sources and those may be consumed in India as also refined for exports to third countries.

Interestingly, Rosneft has big stakes in China and the ties are set to improve further. Russia and China have closer relationship in the energy sector and this has been stepped up further by Russia following sanctions imposed by the West over Ukraine issue. China has got the advantage that it has big financial strength and it can provide ready finances to costly new projects. India’s entry at this stage in Rosneft radar, may not be liked by China but as astute business people, Chinese CEOs are now more interested in expanding their market in the developing countries and they are using both trade and aid to ensure that.

Indian experts feel that the global oil scenario is still hazy and there are difference in views about the possible hike in crude oil prices. As on October 18 this year, the crude oil in Indian basket was priced at US$ 49.18 per barrel. There has been some rise but still, the hike has not been much. Experts point out that the crude oil price might go up to US$ 55 a barrel around the year end but again this may come down in 2017. India is supposed to record the fastest growth in oil consumption till 2040 and India will have a big stake in the crude oil pricing in the coming days. Rosneft will be participating in the regional market with crude oil being processed in both its refineries in China as also at Essar’s in India.Thus there is a possibility of a sort of pricing war between the crude oil processed by the same company in China and India.

Apart from the massive foreign investment by Rosneft in India, the biggest till now, the Goa summit declaration has focused on attracting the investment from the Indian oil companies to the Russian oil fields. Earlier the Russian authorities were more interested in the participation of the western firms, but after sanctions, that has become difficult and now after thorough appraisal, Russian government has come to seek more Chinese and Indian participation in the new oil fields which have been opened up to the foreign countries for development and exploration. Russia wants Indian companies in the Arctic fields of the Russian Federation.

As of now, the ONGC Videsh Ltd has been most active in expanding its operations in the Russian oilfields since 2001 when it entered first the Sakhalin oil fields. The consortium led by OVL has successfully acquired equity in Tass Yuryakh Neftegazodobycha and Vankorneft, making it the largest oil equity acquisition hitherto by India. The two countries have supported a wider use of natural gas as an economically efficient and ecologically clean fuel to promote sustainable development as well as to reduce the greenhouse gas emissions in accordance with Paris agreement on climate change.

In the power sector, the erstwhile Soviet Union helped the foundation of the powerful public sector in India in fifties but this cooperation level was discontinued after the fall of the Soviet Union in 1991, now again there has been talk of collaboration in the setting up of power plants in India as also modernization of the existing power plants. The same spirit has been evident in respect of Russian offer of collaboration in producing solar power. Both governments will work together in building solar power stations in India.

Thus just not nuclear power plants at Kudankulam where discussions have started for the fifth and sixth nuclear power plants, the India- Russia collaboration this time covers the entire power sector including both traditional and non-traditional areas. Goa summit that way has been able to correct a number of distortions which took place earlier in the ongoing saga of India-Russia cooperation. (IPA Service)