IOCL, OIL & BPCL signs deal with Rosneft

Moscow expects to raise at least 700 billion rubles ($11 billion) from the sale. Sources familiar with the agenda were cited by Bloomberg News as saying a sale in a minority stake in state oil company Rosneft may be also on the table for Putin’s visit.

China and India have recently expressed interest in Rosneft as a step to strengthen their operations in Russian Federation, the world’s largest exporter, but none of the parties have clarified whether they are considering a joint deal. The focus so far has been on boosting oil and gas supplies to China, the region’s largest market and a pivotal financier for Rosneft, whose ability to tap global capital markets is restricted by sanctions.

Last month, India’s largest oil company, ONGC, agreed to pay Rosneft $US1.27 billion for 15 per cent of Vankor, one of the largest Russian oil fields to go into production in the last quarter century. The International Energy Agency predicts India, the fastest-growing major economy, will consume 4.2 million barrels a day this year, surpassing Japan’s 4.1 million, and use an additional 6 million a day by 2040, compared with 4.8 million barrels a day more for China.

Bringing together two of Asia’s top-three economies in Rosneft, which produces more oil than Exxon Mobil Corp., may help Putin cover the budget deficit, and it could increase the country’s geopolitical power in a period when the conflicts in Ukraine and Syria brought relations with the European Union and Europe to the post-civil war’s lowest level. The price of oil was up 2% in early trading Monday, with the worldwide Brent price back above $50 per barrel, and the USA benchmark price was near $49.

The agreement between Oil India, IOC, and Bharat PetroResources, an arm of Bharat Petroleum Corp and state-run Rosneft was signed in St. Petersburg.

The deal, announced by Rosneft on Friday at the St Petersburg International Economic Forum, is valued at $2.02 billion, according to two officials from companies involved in sale, who asked not to be identified because the price isn’t public. However, Indian Oil Minister Dharmendra Pradhan said: “We are not rivals”. This reflects Mr. Putin’s urgency in finalizing the deal as soon as a strategic buyer is found that isn’t a “cheapskate”.

Politically, Putin is looking to firm up his geopolitical position after conflicts in Ukraine and Syria estranged the USA and Europe and invited sanctions.