Russia was careful to avoid official comment on the India-China Doklam stand-off. When asked about the significance of the forthcoming India-Russia joint military exercises, Indra2017, in the context of India-China tensions, the MFA spokeswoman stated that this routine annual event reflects the “special and privileged strategic partnership” and should not be perceived “in the context of the current situation in India-China relations”. She said Russia was confident that, “as responsible members of the international community, New Delhi and Beijing will be able to find mutually acceptable ways to quickly defuse the tensions that have arisen between them”. A mainstream Russian newspaper reported,quoting unnamed official Russian sources, that China had sought Russian help in resolving the Doklam issue, while India had made no such request. The veracity of this report is not clear.
A consortium led by Russian oil giant Rosneft announced the closure of the deal to acquire 98% of Essar Oil, including its Vadinar port and refinery and its 3500 retail outlets, for about US$12.9 billion. It is Russia’s largest foreign investment and the largest ever FDI into India. The consortium beat back competition from Saudi and Iranian oil majors, which were also seeking to access the lucrative Indian market. The consortium apparently plansto expand annual capacity of Vadinar refinery from 20 to 24 million tons, to set up a downstream polypropylene unit and to increase the number of retail outlets in India to 6000. The longer-term objective is to use this base for forays into Asia Pacific markets.
The Russian media reported that Rosneft has significant crude holdings in Venezuela (as part of various barter arrangements). They will now feed the Vadinar refinery, replacing West Asian sources.
Rosneft’s investment in India mirrors the recent large Indian investment in Russia’s hydrocarbons sector. In all, Indian companies have invested about US$ 5 billion in 2015-16 in two Rosneft subsidiaries. ONGC Videsh’s earlier investments in Russia total another $ 5 billion. The sheer size of these mutual investments should ensure their protection against decisions by either government prejudicing the interests of the investors. At a broader level, they demonstrate to corporate India that lucrative investments are available in today’s Russia, and that large Russian corporates have investible resources, which can be attracted to India.
August 30, 2017