India, relying on its historical association with Russia, is exploring opportunities for energy resources in the latter's Yamal-Nenets region located north-west of Siberia. It believes that Russia has a strategic advantage over main rival China unlike in Africa, reports Livemint.
The Yamal-Nenets region accounts for around one-fifth of the world's natural gas production and meets 90 per cent of demand in the country.
State-run companies that initiated the move require an investment of between $1.5-1.7 billion (Rs.6,840-7,552 crore) for an opportunity in the Yamal peninsula that is being offered by Russian firm OAO Novatek. The Indian state units include ONGC Videsh Ltd. (OVL), the overseas arm of Oil and Natural Gas Corp. Ltd. (ONGC), GAIL (India) Ltd and Petronet LNG Ltd. (PLL).
Russia's "Project Yenisey" involves an upstream hydrocarbon block-linked natural gas liquefaction project and liquefied natural gas (LNG) marketing.
The company had the option either to market LNG in Russia or bring it back to India, and the overall investment would be in the region of around Rs.7,000-8,000 crore. However, things were at nasal stage, a senior GAIL executive said.
Novatek has a 51 per cent stake in OAO Yamal LNG, which has the licence for exploration and development of the South Tambeyskoye field located in the north-east of the Yamal peninsula.
The Russian government has decided to develop the Yamal peninsula, because abundant availability of gas. However, the gas business is still evolving. The exact contour of the project is yet undecided, said another official close to the development.
India, which is heavily dependent on oil imports, was looking for new energy assets to meet growing demand. At present, it is the world's fifth largest oil importer, meeting 80 per cent of its needs from overseas. It will become the third largest after the U.S. and China before 2025, according to the International Energy Agency. As per the BP Statistical Review of World Energy, India's primary energy consumption in 2009 was 469 million tons of oil equivalent, or 4.2 per cent of global consumption.
In the case of Russia, India is looking to weave together these investments as part of an overall bilateral agreement on energy. So far, specific energy deals were struck that involved Indian investments in Russia. Now, India is looking at a comprehensive umbrella agreement for the energy sector.
India's energy investments in Russia already include a 20 per cent stake in the Sakhalin-1 hydrocarbon block through OVL and the 2008 buyout of UK's Imperial Energy, which has operations in Russia.
Indian investments in Russia were $4.25 billion, mainly in the hydrocarbon sector, while Russian investments in India were $1 billion, predominantly in the telecom sector. Russian President Dmitry Medvedev is scheduled to visit India next month.
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