Big mutual investments will allow India and Russia to navigate geopolitics
“Indian oil companies have already invested several billion dollars in the Russian oil fields of Sakhalin, Vankorneft and Taas-Yuryakh. However, these investments cover only a small part of India’s oil needs and need to be scaled up. A partial solution to India’s energy problems would be to invest directly and acquire a 5-10% stake in Rosneft and Gazprom. They are both companies that pay dividends – a surge in oil and gas prices would increase the profits of these companies, and the flow of dividends to shareholders (including India) would partly offset the higher bill from imports, ”the report suggests.
India has taken a positive step towards increasing its engagement in the Russian energy industry by opening the Indian Energy Board (IEO) in Moscow, which is home to five major Indian public sector units (PSUs). IEO, launched in March 2021, aims to find new business opportunities in Russia, build capacity and import and export petroleum products, according to the report.
“India’s investments will also benefit Russia. Western European countries, which have long been buyers of Russian oil and gas, have seen their energy needs decline as their populations age and consumption becomes more efficient. The growing dependence on renewable energies further contributes to the decline in their use of oil and gas. China, which is an important market for Russian oil and gas, is expected to follow a similar trend. Investments by Indian energy companies in Russia can help secure access to new markets, ”suggests the report.
“The Russian company Rosneft has already acquired a majority stake in the Essar refinery of 20 million tonnes per year, with the aim of ensuring future access to the market for its oil. But this investment only concerns oil, not natural gas. Russia now faces competition for gas export markets from the United States, which exports shale gas to Western Europe, a traditional Russian market. Russia must therefore turn to other markets such as India for its gas. Just as Rosneft has invested in an oil refinery, Gazprom can partner with Indian state-owned companies that are planning to build at least ten liquefied natural gas (LNG) terminals. In addition, India wants to bring pipeline gas to 70% of its population, which will require dozens of urban gas distribution networks, which can also be an investment opportunity. In addition to ensuring market access, these investments will also protect Russia in the event of falling energy prices, as retail margins are much more stable than commodity prices, ”the report said. .
Putin’s visit to India saw both sides reiterate their long-term commitment to supply India with crude oil and LNG and increase Russian participation in the Indian petrochemical market through investments. The two countries also welcomed the proposal to create a gas working group to identify areas of mutual interest, such as investments in gas distribution projects and its use in fuels like hydrogen to deepen their cooperation. energy, said Gateway House.