India to Open ‘Russian Energy Corridor’ to Cut Reliance on Traditional Suppliers

MOSCOW: India and Russia will unveil a comprehensive energy co-operation agreement next week when Prime Minister Narendra Modi and Russian President Vladimir Putin meet at Vladivostok that seeks to open a “far east energy corridor” intended to reduce India’s dependence on traditional fuel suppliers.

The framework, to be inked at the Modi-Putin summit, aims for an alternate route for oil, gas and coal from the Russian far east, an area marked out by both nations for enhanced cooperation and investment.

“A joint statement on comprehensive energy co-operation will be issued. A five-year complete roadmap will be signed. Several issues will be mentioned in the roadmap. Discussions are at a final stage. A new dimension is coking coal. MoUs will be signed at company level also,” oil minister Dharmendra Pradhan told TOI.

India is preparing to begin regular imports of Russian crude and coking coal, both from the far eastern region of Russia, where Indian state-run oil companies have invested billions of dollars in oil and gas projects. In this context it is fitting that the plan be revealed at Vladivostok, a major terminal of the Trans-Siberian railway.

Modi is chief guest at this year’s Eastern Economic Forum, Putin’s annual gig of world leaders and captains of industry, to promote investments in the natural resource-rich far eastern region. Pradhan’s visit is the third successive by an Indian minister- after commerce minister Piyush Goyal and foreign minister S Jaishankar – aimed at preparing the groundwork for the Modi-Putin summit.

Top executives of state-run oil companies such as IndianOil accompanying Pradhan are discussing terms of oil imports. Russian crude, benchmarked to expensive North Sea Brent, has so far found its way here only occasionally due to price issues and difficulty in shipping from the far east.

Supply deal for Russian crude will send a strong signal to oil exporting cartel OPEC and its West Asian members, India’s main suppliers. “Russia is a close partner of OPEC. It is also a big producer and exporter of oil and gas. Term contract will show it is possible to reduce India’s dependence on OPEC. It helps our negotiations with OPEC,” a senior executive told TOI.

The Russia agreement also balances India’s growing energy ties with the US. IndianOil earlier this year signed a term contract for US crude, a first for India, to make up volumes lost after New Delhi stopped buying Iranian oil due to US sanctions. Other refiners too are looking at term contracts for US crude. Also, state-run gas utility GAIL also has long-term LNG contracts.

Source: ToI

Image Courtesy: DC