New Delhi/Moscow: Indian state companies signed energy deals worth billions of dollars with Russia's Rosneft on Wednesday to buy into its most promising assets in Siberia, stepping up a drive to cut New Delhi's dependence on imports.
Prime Minister Narendra Modi, who wants to cut India's oil imports by 10 per cent in six years, is steering efforts to buy foreign energy assets, taking advantage of low global oil prices and a slowdown in China's overseas acquisitions.
Under the deals signed with Rosneft CEO Igor Sechin, the Indian companies will raise their stake in the Vankor oil field to almost 50 per cent and buy about 30 per cent of the Taas-Yuriakh field.
The deals will help Rosneft, the world's biggest listed oil producer by output, to pay off debts incurred in its dollar 55 billion acquisition of TNK-BP in 2013.
Russia is keen to develop and deepen its Soviet-era economic ties with India and sell oil to one of the world's fastest-growing economies at a time when its own economy is stagnant, hit by Western sanctions and a plunge in global oil prices.
PM Modi had pitched to Russian President Vladimir Putin for the granting of stakes to Indian oil firms during his visit to Moscow in December.
The deals will help India to secure Russian oil output, while Rosneft will gain access to the Indian market, Mr Sechin told reporters in New Delhi.
Mr Sechin met Essar Oil officials during his visit and said that Rosneft hopes to conclude a deal to buy a 49 per cent stake in the 400,000 barrel-per-day Vadinar refinery in western India by the end of June.
The proposed deal would give Rosneft an additional outlet for its oil as it grapples with a global crude supply glut.
Energy bridge
"We are establishing a reliable energy bridge between our countries, which will be developing the interests of both Russia and India," Mr Sechin said.
A consortium of Oil India, Indian Oil Corp and Bharat PetroResources (BPRL), a unit of Bharat Petroleum Corp, has bought 29.9 per cent stake in Rosneft's Taas-Yuriakh field.
The companies will together pay $1.121 billion for their share in the operation and dollar 180 million each for future capital expenditure, a source with knowledge of the deal said.
Meanwhile, India's Oil and Natural Gas Corp signed an initial deal to raise its stake in the Vankor project to 26 per cent from 15 percent, while the other three companies could together pick up 23.9 per cent.
A final deal for Vankor will be signed in June, sources told Reuters last week.
If the deals go through, Rosneft will retain 50.1 per cent of Vankor, which produced 22 million tonnes of oil in 2014, representing about a tenth of the company's total output.
Vankor's oil is shipped to Asia, mostly to China.
Indian companies could pay close to $3 billion for boosting their Vankor stake, based on the price ONGC paid for its 15 per cent stake in the project, an ONGC source told Reuters.
IOC-Oil India-BPRL also signed a preliminary deal to buy a stake in Rosneft's Vankor cluster - a separate group of small oil fields.
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