Fissures remain in the energy sector between India, Russia
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At the end of the 13th Annual Summit between India and Russia, the two sides remained divided over giving tax incentives to ONGC Videsh Ltd (OVL) for its investment in Imperial Energy as Russia is understood to linked the issue with grant to special privileges to its own telecom entity Seistema that has lost its licence due to recent Supreme Court order.
It is understood that Indian side raised the issue of difficulties faced by Imperial Energy and hoped that the ensuing tax reforms would be undertaken by Russian government to turnaround the operations of the company that is faced with a severe slump in oil production from blocks located in Siberia. Sources said that progress on this has now been linked by the Russian side to the way the issue of licence is handled by the Indian government on Seistema.
"It is difficult to strike a bargain with Russia if no progress is made on issues raised by them. They are acting very tough now and want issue of Seistema Shyam is not resolved in time or face demand for billions of dollars of compensation," said an official source.
Meanwhile, at the end of the day-long summit meeting the two sides agreed to intensify efforts to enhance mutual investments in exploration and production of oil and gas in both the countries and joint ventures in upstream and downstream activities in India, Russia and third countries.
Also, on the table was Indian Oil PSUs interest in acquiring equity stake in discovered/producing assets and in proposed LNG liquefaction projects in Russia along with Russian oil and gas companies as well as in procuring Russian crude oil and off-take of LNG for India.
The sides noted that to promote exploration and production cooperation between the two countries, it was essential to source oil and gas from Russia and leverage the market and downstream business in India with involvement of respective oil and gas companies of both the countries, ONGC Videsh in Russia for upstream business and Rosneft in India for downstream business.
While both the sides noted that the gas supply to India by Gazprom Group will be a stable and reliable source of resources for the development of Indian gas market, they also welcomed the conclusion of long term LNG Sales and Purchase Agreement for the supply of 2.5 MMTPA of LNG between "Gazprom Marketing and Trading Singapore" and GAIL and expressed hope for continuation of cooperation in the sphere of LNG supply.
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