India, Russia Eye $30-Billion Bilateral Hydrocarbon Trade

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Researched by Industrial Info Resources India (Delhi, India)--India and Russia have recently entered into series of agreements to enhance co-operation in the hydrocarbon sector. The two counties have agreed to jointly explore oil and gas assets, lay pipelines, build petrochemical plants and cooperate in infrastructure development to treble bilateral trade to $30 billion by 2025.

During the recently held Annual India-Russia Summit in New Delhi, the two strategic partners have recognized the enormous untapped potential in bilateral trade, investment and economic cooperation. India's Essar Oil Limited (BSE: 500134) (Mumbai) struck a deal with Russia's oil-major Rosneft (Moscow) (RTS: ROSN) to source 10 million tons (MT) of crude oil for 10 years. The supply of crude is likely to begin in 2015.

The deal, which is worth $45 billion at the current international crude prices of $60 per barrel, secures two-fold benefits for both the nations. Rosneft grants itself a secure market outlet for its crude oil, while Essar gains a reliable and stable supplier of crude for its refining facility. Essar also gains with Russian bank VTB as a strategic business partner who signed a deal to open a $1 billion credit line.

To further add to the economic ties, India's state-run exploration major, Oil and Natural Gas Corporation Limited (BSE:500312) (Dehradun), has been offered shares in the liquefied natural gas (LNG) project in Russia's Far East. The facility is designed to produce 5 million tonnes of frozen gas starting from 2018-2019. Russian fertilizer company Acron Group (MCX:AKRN) also signed a preliminary agreement with state-run miner NMDC Limited (BSE: 526371) (Hyderabad, Telangana), to help a group of Indian firms buy stake in Acron's $2 billion potash mine in Russia.

Russian President Vladimir Putin and Prime Minister Narendra Modi envisage collaboration between hydrocarbon companies in oil and gas exploration and production, as well as in LNG projects and supplies, as vital for increasing trade between the two nations.

"It is expected that Indian companies will strongly participate in projects related to new oil and gas fields in the territory of the Russian Federation. The sides will study the possibilities of building a hydrocarbon pipeline system, connecting the Russian Federation with India. They will also examine avenues for participation in petrochemical projects in each other's country and in third countries," a joint statement said.

The leaders have called on the Indian and Russian companies to pursue greater participation in each other's power generation projects, as also in supply of equipment, technology for enhanced oil recoveries and extraction of coal, including coking coal.

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