Big Oil and Gas Deal in the Pipeline for India-Russia

December 2, 2014

In advance of the visit to New Delhi by Russian President Vladimir Putin, beginning Dec. 11, the Chairman of ONGC (Oil & Natural Gas Corp., India's largest oil and gas exploration firm), Dinesh Kumar Sarraf, spoke of the likelihood that India will become involved in deals to jointly explore and ship oil and gas from Russia to India.

The meetings between Putin and Indian Prime Minister Narendra Modi will include energy talks, and a visit to the Kudankulam nuclear power site. Sarraf told Bloomberg, Nov. 26, that,

"Russia may be looking for new investments in their energy sector, especially now, and we're keen to invest. We've always maintained that we respect UN sanctions, and not really those imposed by individual countries. If we see good opportunities in Russia, we'll go."

This expectation is a follow-on to the mega-deal struck between Russia and China, at the May visit of President Putin in Beijing with Chinese President Xi Jinping: a 30-year gas sale in the range of $300-$400 billion; exploration of the eastern Siberian gas fields; and construction of the $55 billion "Power of Siberia" pipeline to China. Work has started.

Over the Summer, Indian government officials said that a blueprint for a similar arrangement, including a crude oil pipeline, was being worked on, after the Putin-Modi talks at the July BRICS meeting in Brazil. The Hindustan Times called it a $40 billion deal, and reported Aug. 4:

"Two routes are being considered for the gas pipeline project. one is from Russia's southern border to India via the Himalayas, and the second from Russia-Astrakhan-Khazakstan-Uzbekistan, and then along the Turkmenistan-Afghanistan-Pakistan route to India (TAPI gas pipeline)."

As Bloomberg notes, ONGC already has investments in Russia; its foreign operations unit, ONGC Videsh, for example, is a player in Rosneft's Sakhalin 1 project, which includes several fields in the sub-Arctic region of northeast Russia.