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As Russian oil sector faces financial issues due to sanctions on banks, Russian Deputy PM speaks to Indian Petroleum minister, invites Indian investment

Russian Deputy Prime Minister Alexander Novak talked with the Indian Minister of Petroleum and Natural Gas, Hardeep Singh Puri over phone yesterday. The discussion was cantered on bilateral collaboration in fuel and energy, as well as education, amid the sanctions against Russia by western countries following its invasion of Ukraine. They addressed present and prospective collaborative initiatives in the fuel and energy industries, noting that current projects are being implemented smoothly.

As per a Russian statement, Deputy PM Novak said, “What we have is a particularly privileged strategic partnership; the leaders of our countries maintain regular contact. Mutually beneficial cooperation is actively promoted, including the Arctic LNG 2 and Sakhalin 1 projects. Gazprom supplies LNG to India, and Rosneft continues its systematic work with its Indian partners.”

The Deputy PM added, “We are interested in further attracting Indian investment to the Russian oil and gas sector and expanding Russian companies’ sales networks in India.”

Large Russian firms, according to Mr. Novak, are actively involved in projects in India, such as the manufacturing, refining, and distribution of oil, natural gas, and coking coal.

“Russia’s oil and petroleum product exports to India have approached S1 billion, and there are clear opportunities to increase this figure. We expect to continue cooperating in the development of peaceful nuclear power, in particular, in building the nuclear power units at Kudankulam,” the Deputy Prime Minister of Russia added.

Alexander Novak and Hardeep Puri also discussed a bilateral educational partnership, with a focus on increasing opportunities for Indian students to study at Russian universities.

Official statement from the Indian side is yet to come.

Russia’s invitation to Indian forms to invest in Russian petrochemical sector is significant in the current scenario, as the Russian Deputy Prime Minister has informed his country is facing difficulties in the sector due to sanctions. He told the Russian parliament that the contracted volumes for March will be delivered as planned, but that there are problems affecting exports of crude oil and refined products to be delivered in April.

“Here we are currently facing certain problems, primarily related to financing,” he said. However, the minister added that Russia has maintained full production of both oil and gas so far.

He said that the sanctions imposed on Russian banks have caused problems for all market participants, including “suppliers, buyers and traders.” He had added that specifically there were problems witg availability and issuance of letters of credit. Apart from financial issues, Russian oil companies are also facing difficulties in obtaining tankers and insurance.

Notably, ONGC Videsh has failed to get bids for its tender to sell 700,000 barrels of Russian sokol crude. The overseas arm of ONGC has a 20% stake in Russia’s Sakhalin-1 project and sells its share of oil through tenders. However, for the tender that closed on Thursday, all the parties that had shown an interest withdrew their bids.

While US, UK and Canada has banned import of Russian, it is not expected to effect Russian export much as European countries, the major buyer, have not stopped buying Russian gas and oil yet. Even though EU nations have imposed other sanctions on Russia, they are so heavily dependent on Russian gas and oil that they can’t stop it immediately without securing alternatives. However, due to sanctions in the financial sector, Russian oil industry is facing problems.

Russia-India Cooperation

Russia has traditionally been an important partner for India. Since the signing of the “Declaration on the India-Russia Strategic Partnership” in October 2000 (during President Putin’s visit), India-Russia relations have taken on a qualitatively new character, with increased cooperation in almost all areas of the bilateral relationship, including politics, security, defense, trade and economy, science and technology, culture, and people-to-people ties. 

Amidst the ongoing conflict between Russia and Ukraine, Russia has played a key role in ensuring the safety of Indian citizens stranded in Ukraine. The Indian government repeatedly pressed Russian authorities to set up a safe path for Indian students who need to be evacuated. Also, according to reports, Russian President Vladimir Putin ordered Russian soldiers to safeguard Indian students with “every possible effort.”

Ayodhra Ram Mandir special coverage by OpIndia

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OpIndia Staff
OpIndia Staff
Staff reporter at OpIndia

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