Implications of Rosneft – Essar Oil Deal

Why in news?

• Essar oil sold its refinery & downstream marketing section to Russian Rosneft.
• Geo-political implications of the deal require a closer scrutiny.

Why the deal?

• Essar could not service its debts.
• Russian public sector company - Rosneft saw an opportunity to make an entry into the high-growth Indian market.
• This deal will also help Rosneft secure quality infrastructure for processing its heavy Venezuela crude in India.
• The deal had the strong backing of both the governments.

What are the concerns?

• Strategic Interests - The Russian state is the majority stake holder in Rosneft. 
• The company is easily an instrument for pushing Russia’s economic and geo-political agenda.
• The transfer of ownership of the Vadinar port to Russia is also of concern in the backdrop of China’s “String of Pearls” doctrine.  
• China Factor - China Energy Cooperation Ltd - CEFC, is a private energy company with strong political ties in Beijing.
• Rosneft recently announced that the Chinese company would purchase 14.6% stake in it.
• CEFC might even get a board position and privileged access to information about Rosneft’s strategic plans.
• Russia is already the largest supplier of crude oil to China, delivering approximately 1.1 million barrels a day.
• All these confirm the deepening energy relations between the two countries which puts Indian interests in a fix.

How will the Geopolitics?

• As Russia has stakes in all the countries of the region, it could help broker the Iran-Pakistan-India – (IPI) pipeline project.
• Ultimately, Russia’s perpetual interests is what will drive Rosneft whether in Venezuela, India or with the Chinese.
• India needs to develop foresight to protect its own interests in the event of Rosneft getting sucked into geopolitical imbroglios.

Source: Indian Express