An Indian Consortium led by ONGC Videsh LTD (OVL) is currently discussing with Russian OAO Novatek a possibility of buying a 15% stake in its subsidiary OAO Yamal LNG for developing a natural gas field.
The company OAO Yamal LNG has the license for exploration and development of the South Tambeyskoye field. OAO Novatek owns 80% of the OAO Yamal and is offering a 29% stake for participating in the project.
Novatek states that its upstream activities are mainly conducted in the Yamal-Nenets region located north-west of Siberia. This is the world’s largest natural gas producing area accounting for nearly one-fifth of the world’s natural gas production.
Indian journalist Utpal Bhaskar in his article for Livemint analyses the opportunities this deal can open for both countries. A pipeline from the South Tambeyskoye region goes to Europe. But due to the recession European gas demand hasn’t increased lately whereas Indian energy consumption grows at a fast rate. According to the International Energy Agency’s statistics, Indian energy consumption is expected to double by 2030 which will be equal to 833 million tonnes of oil. India currently imports more than 80% of its energy requirements, and creation of LNG capacities has given a boost to the development of the Indo-Russian cooperation in the energy sphere.
According to Livemint publication, India intended to submit a non-binding offer on 31 May 2011.
At the moment OVL hopes that Russian government’s support of the project will bring certain incentives for the Indian company such exemption from a mineral extraction tax (MET) which entered into force in 2002. It would be of major significance because MET payment combined with export duties and transportation tariffs subtracts 80% of the produced value of gas.
India strives to diversify its import basket, and the prospect of exporting from Russia looks good, with Russian oil production rate equaling 9.93 million barrels per day and gas production rate making 546.8 billion cu.m per day.
At the moment China is the main Indian rival in the field of oil and gas assets but in Russia India believes to have strategic advantage over China due to its historical ties with the country.
All rights reserved by Rossiyskaya Gazeta.
to our newsletter!
Get the week's best stories straight to your inbox