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Russia-India oil deal challenges Saudi supremacy in Asia www.rt.com
The $13 billion sale of India's Essar Oil to Russia's Rosneft and other investors, gives Russia access to the most promising and fastest growing market. The deal also challenges Middle East producers who provide nearly two-thirds of India’s imported energy.
The agreement, signed on Saturday, is the biggest foreign acquisition in India. Rosneft is purchasing a 49 percent stake in Essar, with another 49 percent sold to a consortium of the Netherlands-based commodity trading house Trafigura and a Moscow-based private investment company United Capital Partners.
India is expected to become the fastest growing oil consumer through 2040, according to the International Energy Agency.
The deal includes the sale of nearly 2,700 Essar Oil filling stations and allows Rosneft access to a market of 1.3 billion people which imports 80 percent of its crude requirements.
“India will be the most important product-growth market over the next 25 years, making it important to Russia,” said Neil Beveridge, a Hong Kong-based analyst at investment advisory Sanford C. Bernstein & Co.
Another critical aspect for Russia was beating out rival suitors from Iran and Saudi Arabia to buy Essar.
“This would be in response to Saudi Arabia’s attempts to penetrate the European market, which is dominated by Russian oil,” said Abhishek Kumar, an analyst at InterfaxEnergy’s Global Gas Analytics in London, stressing that the acquisition would bring Russia greater influence in the Asian market.
The transaction opens up a “unique synergetic possibilities” for active assets owned by Rosneft, as well as for projected enterprises, said Rosneft CEO Igor Sechin. The takeover offers the potential to expand in the Asia-Pacific region by supplying fuel to Indonesia, Vietnam, the Philippines and Australia, according to Sechin.
The Russian oil firm plans to supply ten million tons of Venezuelan crude to Essar’s Vadinar refinery over the next decade. Rosneft and Venezuela’s state-owned Petroleos de Venezuela signed a strategic partnership pact earlier this year.
Published Date:2016-10-18
