Russia has been making headlines for the past month or so with its involvement in the Ukraine crises. With the annexation of Crimea, Vladimir’s Putin’s government has irked many of the Euro Nations as well as the United States. Hydrocarbons, the Oil & Gas sector and allied petroleum industries have always featured prominently in Putin’s strategic plans. Now, with the whole Ukraine episode drawing fire from the West, Russia has begun sending feelers to big names in the Indian Oil & Gas sector for possible tie-ups and partnerships.
Enter Rosneft – an integrated Oil & Gas company owned by the Government of Russia. Headquartered within minutes of the Kremlin, the State-owned major is perceived to be close to the man calling the shots in Europe’s Eastern Bloc and Russia – Vladimir Putin. The CEO of Rosneft, Igor Sechin has reportedly been in touch with Reliance Industries Limited (RIL) Chairman and MD, Mukesh Ambani about a partnership. While confirmed reports of a meeting were unavailable, many analysts believe that this would suit both parties, especially RIL who need crude oil and is looking to strengthen its overseas exploration portfolio. For Rosneft, anxiety over possible sanctions from the West and India’s growing oil demand, this would represent a new beginning and invariably strengthen Indo-Russian relations.
Moscow-Based Rosneft is the largest publicly trades Oil Company in Russia and one of the world’s top listed oil producers by output. For RIL, any partnership would present opportunities in in both, the Oil & Gas sector as well as Rosneft’s up and coming liquefied natural gas plant. While this would mean great news for RIL, a look at the bigger picture is an indication of how significant this deal could be; Indian Oil Majors who have found it difficult to enter the Russian Market may find the going easier. Industry analysts remain optimistic about this deal as even western sanctions wouldn’t cause too many problems. A tripartite arrangement, where Russia could sell Crude to a foreign county from whom India could source it looks likely in case of sanctions being implemented.
Overseas Growth for RIL:
Not being content at being a major player in India, Mukesh Ambani owned RIL has been looking at consolidating its overseas Oil & Gas portfolio. Recently, it has signed contracts for two blocks in Myanmar. These in addition to the four blocks – two each in Yemen and Peru along with its presence in Venezuela would make RIL a major player in the Oil & gas business on the global level.