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. Last Updated: 07/27/2016

Indians Arrive Seeking Landmark Energy Deals

bloombergIndian officials are eyeing a stake in Yukos' former production unit, Yuganskneftegaz.
Top Indian officials held discussions in Moscow on buying a stake in Yuganskneftegaz and attracting major Russian investors to the Indian oil and gas sector, Petroleum and Natural Gas Minister Mani Shankar Aiyar said in an interview Monday.

Aiyar held discussions Monday on India's state-owned Oil and Natural Gas Corp. buying a stake in Yugansk, and presented the planned sale of exploration blocks to representatives from companies including Gazprom, LUKoil and Rosneft.

India's ONGC is keen to take a stake worth billions of dollars in Yugansk, which was sold by the government last December for $9.3 billion, officials said.

"We were told the dialogue is on and there are no full stops, so I have come to discover if we can remove some of the commas and remove some of the semicolons," Aiyar said when asked about the Yugansk purchase.

We are searching for "what we can get -- provided our partners want us and providing the terms are right," Aiyar said.

India and China, facing soaring domestic energy consumption as their economies boom, are seeking to secure access to oil and gas reserves in Russia, the world's biggest oil producer after Saudi Arabia.

Yugansk, producer of nearly 12 percent of the country's annual oil output, has become the target of those ambitions since the government's sale of Yukos' former unit. Rosneft controls Yugansk after buying Baikal Finance Group, a mystery bidder that won the auction for Yugansk.

Aiyar met with his counterpart, Industry and Energy Minister Viktor Khristenko, on Monday and was due to meet with representatives from Rosneft on Tuesday.

Khristenko said in December that Yugansk's assets would be folded into a state-controlled company in which China National Petroleum Corp. might take a 20 percent share. Finance Minister Alexei Kudrin said earlier this month that Chinese banks lent Rosneft $6 billion via Vneshekonombank, though Rosneft said the money was not connected with its Yugansk purchase.

Yukos has threatened legal action against anyone involved in the sale or purchase of Yugansk and this month said it had sued Gazprom, Rosneft, Gazpromneft and Baikal Finance Group for what it called the "expropriation" of Yugansk.

Yukos has also warned ONGC against getting involved in Yugansk. Aiyar agreed that the legal battles around Yugansk were a concern.

"I trust that that these companies will not make their investment decisions until they have completed their legal due diligence," Aiyar said.

Indian energy demand makes Russia a key partner, Aiyar said, adding that within 20 years, India will have to import 85 percent of its oil and 55 percent of its gas. At present, about 70 percent of the oil consumed in India is imported.

ONGC, which already has a 20 percent stake in Sakhalin-1 in partnership with Rosneft, is eyeing a stake in Sakhalin-3 projects, Rosneft's Vankor oil field and Kurmangazy in the Kazakh part of the Caspian, officials said. Rosneft has a stake in Kurmangazy.

ONGC signed a cooperation agreement with Gazprom on Monday and Gazprom CEO Alexei Miller will visit India later this year, Aiyar said.

"Our single most important strategic ally in the energy sector is Russia because their supply position is as strong as our demand position," he said. "Russia's strength is its energy supply and our strength is our energy demand -- we are obvious partners."

At a meeting in Moscow, Aiyar presented some of Russia's biggest energy companies with a plan to offer onshore and offshore exploration blocks under the fifth round of India's New Exploration Licensing Policy. Aiyar has marketed the proposals to investors in New Delhi, London and Houston over the past two months.

"We have to secure all the hydrocarbons we can, first and foremost in India itself, which is why I am looking for Russian investment in India, but also to ensure access by tying up agreements, and there is no country richer in energy resources than Russia," Aiyar said.