India gets oil deals as Russia opens doors

Representative image.

NEW DELHI: India returned to Russia after six years for a bouquet of oil deals, potentially worth $2-3 billion, as Moscow actively seeks partners for meeting capital needs of new fields, amid low crude prices and western sanctions.
On Thursday , Rosneft, the world’s largest publicly-traded oil company , formalised sale of 15% stake in its 100% subsidiary Vankorneft to ONGC Videsh (OVL) for $1.3 billion. The deal gives OVL access to Rosneft’s crown jewel Vanko, the largest onland Russian field developed in the last 25 years. This was followed by a preliminary agreement for giving OVL more stake later and partnerships in other onland fields.

Rosneft also signed a preliminary agreement with a consortium of IndianOil and OIl India (OIL) for selling a stake in another subsidiary , TaasYuryakh Neftegazodobycha, which is developing the Srednebotuobinskoye field. Though the IOC-OIL combine is seeking 29%, which could be worth in excess of $1 billion.Rosneft sold 20% in Tass-Yuryakh to BP for $750 million in October and is negotiating with another company .

OVL had made its last big deal in 2009 by acquiring Imperial Energy . The oil sector agreements, reached as part of the annual summit between PM Narendra Modi and President Vladimir Putin, we re overshadowed by weightier deals in defence and nuclear power. But they indicate a change of heart on both sides.

Bangladesh signs $12.65 billion deal with Russia for nuclear power plants

The first power plant is expected to begin operating by 2022 and the second by 2023. (Representative photo)

DHAKA: Bangladesh’s state-run Atomic Energy Commission signed a deal with Russia on Friday to set up two nuclear power plants, each with 1,200MW capacity, an investment totalling $12.65 billion, a government official said.

Work will begin early next year at Ruppur in Iswardi, 160km (100 miles) from Dhaka, said Kamrul Islam Bhyian, spokesman for the ministry of science and technology.

“Russia will finance up to 90 per cent of the total cost as credit with an interest rate of Libor plus 1.75 per cent,” Bhyian told Reuters.

Bangladesh will clear the total loan within 28 years with a 10-year grace period.
Bangladesh finance minister Abul Maal Abdul Muhith said it would be the country’s biggest power project.

The first power plant is expected to begin operating by 2022 and the second by 2023.

The official said the plant would use a new generation reactor that has a lifespan of 60 years with an option of extending it for 20 years.

The reactor contains improved safety features, and its passive safety system can work for 72 hours in any critical or emergency situation, it said.

Rosatom will maintain the plant for the first year of its commercial operation before handing over to the Bangladesh authorities, and will bear fuel costs for the first year of operation.

Pipavav Defence Shares Surge 20% to Hit 52-Week High

Representational ImageShares of shipbuilding firm Pipavav Defence and Offshore Engineering surged 20 per cent to a 52-week high of Rs 100.25 on reports it is likely to sign a Rs 66,000 crore deal with Russia.

The Bombay Stock Exchange has sought a clarification from Pipavav Defence on the report.

Billionaire Anil Ambani-controlled Reliance Infra has acquired a majority control in Pipavav Defence – which will be later renamed Reliance Defence – after the recently concluded open offer. Pipavav Defence shares are up over 50 per cent since the start of the Rs 1,263 crore open offer on December 2. In March, the Anil Ambani group firm had announced plans to acquire a controlling stake in Pipavav Defence for up to Rs. 2,082 crore.

Reports citing sources said that four Talwar class frigates will be built at a cost of around Rs 30,000 crore at Pipavav Defence. This will be the first time a major warship will be built at an Indian private sector shipyard.

Reports also said that Reliance Defence and Russian United Shipbuilding Company are also likely to sign an agreement for modernisation of all Indian Navy ships of Russian origin at the Pipavav shipyard. The combined value of these two orders is estimated at Rs 66,000 crore, reports said.

Earlier this month, Reliance Defence had got approval for 12 industrial licences for manufacturing of defence-related equipment such as aircraft, helicopters, all terrain combat vehicles, night vision devices, sensors, navigation and surveillance equipment, propulsion systems and simulators. It has applied for 14 more licences.

In another development, Reuters, citing sources, said that the Indian government expects to seal a contract with Westinghouse Electric to build six nuclear reactors in the first half of next year.

Stocks of manufacturers those who make parts for nuclear plants also gained today. L&T edged higher by 0.40 per cent while Walchandnagar Industries surged 7 per cent.

Shares of Pipavav Defence ended locked in 20 per cent upper circuit at Rs 100.25, as compared to a flat broader market.

Oil explorers push deep into Russia for energy ties

Crude oil prices -stocks bet

ONGC Videsh Ltd (OVL)is in talks to raise its stake in Russia’s second biggest oilfield of Vankor while Indian Oil Corp-Oil India are in negotiations for a stake in Taas-Yuriakh Neftegazodobycha oilfield in East Siberia as India looks to deepen energy ties with Russia.

The slew of agreements signed during Prime Minister Narendra Modi’s visit to Russia yesterday included a document that provides for cooperation between OVL, the overseas arm of Oil and Natural Gas Corp (ONGC), and Russia’s top oil firm Rosneft.

OVL was originally interested in taking 25 per cent stake in Vankor but Rosneft in September agreed to sell a 15 per cent interest for USD 1.268 billion.

Sources said besides formalising the September deal, OVL Managing Director Narendra K Verma and Rosneft Chairman Igor Sechin also signed a memorandum of understanding in presence of Modi and Russian President Vladimir Putin that provides for discussions on raising the stake in Vankor.

IOC and OIL signed a separate MoU with Rosneft where they “agreed to examine the possibility of cooperation in respect of the Taas-Yuriakh Neftegazodobycha LLC asset”, IOC/OIL said in statements.

IOC-OIL are looking at 29 per cent stake in Taas-Yuriakh, which operates the Srednebotuobinsk field. It is expected to produce more than 5 million tonnes of oil annually from 2017.

Rosneft in October sold a 20 per cent share in Taas-Yuriakh to BP for USD 750 million.

OVL and Rosneft yesterday signed an Agreement of Confirmation of successful completion of the first stage of the Indian firm’s acquisition of 15 per cent stake in Vankor.

OVL had on September 4 signed Share Purchase Agreement (SPA) and Shareholders Agreement (SHA) with Vankorneft, a unit of Rosneft that is the developer of the Vankor oil and gas condensate field in Turukhansky district of Krasnoyak territory in Russia.

The field, which has recoverable reserves of 2.5 billion barrels, will give OVL 3.3 million tonnes per annum of oil production.

As per the agreement, OVL had the right to walk out of the deal by October 31 but it chose to stay on and two subsequent agreements – oil marketing pact and oilfield services agreement – were signed, sources said.

This marked the completion of Phase-1 of the deal.

The entire acquisition will be completed in 3-4 months after Rosneft does a reorganisation of the Vankor field company and other regulatory approvals including from Russian anti-monopoly authority are obtained.

The MoU signed by Rosneft and OVL provides for cooperation for geologic survey, exploration and production of hydrocarbons onshore and on the continental shelf of the Russian Federation.

“Particularly, the companies will analyse the possibility of expanding their partnership aimed at the development of perspective Rosneft projects in East Siberia”, OVL said in a statement.