KOLKATA (miningweekly.com) – Close on the heels of India’s ONGC Videsh picking up a $1.26-billion stake in Rosneft’s Vankor oil fields, Indian oil exploration and production (E&P) majors and Russia’s Gazprom are seeking to extend collaborations beyond trading in oil and gas to exploration and production projects.
According to a senior Petroleum Ministry official, Gazprom and Indian-government owned E&P majors were exploring collaboration options that would give Gazprom a larger footprint in developing India’s estimated 1.5-trillion cubic metres of gas reserves, permit India’s participation in Gazprom’s international assets and ramp up supplies of liquefied natural gas (LNG) to India from the Russian major’s oil and gas assets worldwide.
All areas of possible collaboration in India, Russia and other countries were discussed during Indian Petroleum and Natural Gas Minister Dharmendra Pradhan’s meeting last week with Gazprom management committee chairperson Alexey Miller, the official said, adding that a working group of Gazprom and the largest Indian E&P companies would set the contours of the collaboration projects.
Besides the Indian Minister, the meeting was also attended by representatives of oil refiner-marketer, Indian Oil Corporation, gas infrastructure and logistics company GAIL India, and Petronet LNG.
One of the more definitive collaboration possibilities on the table was the expansion of the existing Gazprom-GAIL agreement, both in terms of the trading of oil and gas between the two countries as well as joint development of oil and gas assets in India and third countries, the official said.
In 2012, Gazprom Marketing and Trading Singapore, the trading arm of the Russian major, and GAIL had signed a long-term agreement for the supply of 2.5-million tons a year of LNG for a period of 20 years.
It was also pointed out that Russian majors like Gazprom were keen to focus on India’s growing market and appetite for natural gas at a time when dollar revenues from supplies to large existing markets in Europe and Turkey were seen to be dipping on the back of falling oil and gas prices.
Gazprom and Indian companies, including GAIL India, would be holding direct negotiations to explore the most efficient supply line for LNG in the future, including options of swaps to reduce the transportation and logistic costs of bringing Gazprom supplies to the Indian market.
Indian LNG imports during 2015/16 was pegged at 2.14-billion cubic metres, a 15% rise over the previous year, while domestic production of natural gas witnessed a fall of 5.5% at 2.53-billion cubic metres.
To keep up with the pace of rising LNG imports, the Indian government had also unveiled a long-term plan to double capacities of LNG import terminals to 47-million metric tons a year by 2025, up from 21.3-million metric tons at present.
Indian officials acknowledged that the “Russia-India bear hug in the oil and gas sector” was largely the result of aggressive diplomacy at the highest level precipitated by the recent meeting of Russian President Vladimir Putin and Indian Prime Minister Narendra Modi.
The second largest Russian major Rosneft concluded an equity stake sale to ONGC Videsh, the overseas arm of ONGC Limited India, also giving it access to 3.3-million tons a year of oil from the Siberian fields; and naturally the largest Russian company - Gazprom - was keen to ramp up its collaboration with Indian companies, officials added.