Rosneft playing pivotal role in Indo-Russian energy dialogue

As of today, the volume of mutual investments in the projects with the participation of Rosneft and Indian partners exceeded $17 billion. This is more than half of the total volume of accumulated Russian-Indian investments at the moment

Moscow: Russian energy company Rosneft is playing a pivotal role in the energy dialogue between Moscow and New Delhi, actively developing an integrated format of cooperation with Indian partners.

Russia is India's longstanding and time-tested partner. There is regular high-level interaction between the two countries - heads of the two countries hold annual meetings, and there are other mechanisms of political interaction.

In the meantime, India's fast-growing economy is demanding more and more energy resources; hence it is important to systematically develop cooperation in the energy sector as well. In that regard, India's authorities show interest in Rosneft's unique low-carbon Vostok Oil project that produces low-sulphur oil.

As of today, the volume of mutual investments in the projects with the participation of Rosneft and Indian partners exceeded $17 billion. This is more than half of the total volume of accumulated Russian-Indian investments at the moment.

India has been one of Rosneft's key strategic partners for many years, and the investment cooperation between Rosneft and its Indian partners is quite effective. It is evident by the example of many joint projects in Russia and India. Since 2016, Rosneft, together with a consortium of Indian investors, has been developing the Vankor field. It is the largest field discovered and commissioned in Russia in the last twenty-five years. The project is a benchmark as it has become the basis for building an integral format of cooperation between Rosneft and Indian partners.

Another joint production project in Russia - Taas-Yuryakh Neftegazodobycha - is an example of a Eurasian hub that involves representatives of India (a consortium of investors) and Britain (BP) in its development.

Since 2001, the Indian company ONGC Videsh Ltd. has been a participant in the Sakhalin-1 project (the other shareholders are Rosneft, ExxonMobil, and Sodeco of Japan). In 2020 the project produced 12.4 million tonnes of oil and condensate and supplied more than 2.4 billion cubic meters of gas to consumers.

These assets are the most successful international projects of Rosneft. They allowed the company to become a leader in investment cooperation between the two countries. Since 2017, Rosneft has been a co-owner of Nayara Energy, which owns Vadinar, one of the largest and most high-tech refineries in India. The purchase of this asset is the most significant foreign investment in the Indian economy. This investment is justified and strategically flawless for the company: the investors were focused on the dynamically developing Indian domestic market with one of the world's highest growth rates.

Nayara Energy now also owns one of India's largest networks of gas stations, and during the time that Rosneft has been a shareholder of the company, the network has almost doubled in size. Today there are more than 6,200 filling stations there. It is also crucial that Rosneft and its partners are developing petrochemical production at the refinery: at the end of November, Nayara announced the laying of the foundation stone for a $750 million polypropylene plant. And this is just the beginning - at the next stage, the production capacity of the refinery may be doubled. All this will enable us to meet the growing demands of the Indian market.

All these examples are a perfect illustration of how successful the Russia-India energy dialogue can be. It is important to understand that this is far from the limit. So far, Russia is not India's main partner in the energy sector, although there are all opportunities to do so, given the potential of the Northern Sea Route. Plus, the two countries share and similar positions with regard to the energy transition to a low-carbon economy.

Due to such potential, it is not surprising that the Indians are one of the most probable investors in the Vostok Oil project in Taimyr. Indian investors are clearly interested in the project, and high-ranking people from the Indian government have spoken about it more than once publicly.

The resource base of Vostok Oil comprises over 6 billion tons of premium low-sulfur oil, which makes it the largest project in the Russian and world economy. In addition, it is one of the leading low-carbon projects in the world - Vostok Oil's carbon footprint is 75 per cemt lower than that of other major oil projects. Moreover, the proximity of the project fields to the unique Northern Sea Route transport corridor gives it an undeniable logistical advantage in supplying oil to markets in the Asia-Pacific region, including India.

In this context, Indian partners' interest in Russian shipbuilding is also not accidental. In September, Prime Minister Modi announced at the Eastern Economic Forum in Vladivostok that one of India's largest shipyards had become a partner of the Zvezda shipbuilding complex in the Far East.

Should Indian companies take part in Rosneft's two landmark projects - Vostok Oil and Zvezda Shipbuilding Complex - the technological chain will be finally formed. Then the energy dialogue could become no less important as a basis for bilateral cooperation than political and military-technical agreements.

This means that the partners are interested in creating value in all links of the production chain: exploration and production within the framework of the Vostok Oil project, building a fleet for the transportation of hydrocarbons as part of the SSC Zvezda, oil refining, and sales of oil products in the Indian domestic market and in the South Asian region.