Russia’s Rosneft To Supply Oil To Essar Refineries: Looking for a Secure Market
Russia’s Rosneft To Supply Oil To Essar Refineries: Looking for a Secure Market
Russian firm Rosneft has just achieved critical success in coming to a large and lucrative agreement for supplying oil and oil products to India’s Essar refineries.
Russian Deal
Essar Oil just signed a deal with Rosneft on 11th December 2014 for key oil and oil product supplies to its refineries from this Russian firm. The shares of this stock rose 4.91% to INR 115.45 at 10:00 IST on the Bombay Stock Exchange following this agreement, Business Standard reports. An announcement was made by the firm following trading hours on the 11th regarding the deal. The BSE Sensex also reached 78.97 points or 0.29% to reach 27,680.98.
Essar’s Clarification
To media reports saying that Essar Oil will sign a 10 year deal with Rosneft, the company clarified saying supplies may commence in the next year. Consequently, Rosneft grew its distribution area and built deliveries to the region where growth zones of the world’s economy are concentrated.
Winning Outcomes
Rosneft has also been granted a secure market outlet of oil as well as oil products through this move. The deal ensures that Essar gains a reliable as well as stable collaborator regarding supply of oil as well as oil products to its refineries.
The document regarding the agreement was signed in New Delhi by Rosneft’s head Mr. Igor Sechin and Essar founder Mr. Shashi Ruia in the presence of Russian Federation president Vladimir Putin and PM of India, Shri Narendra Modi.
The agreement opened up new avenues of cooperation between the two nations based on synergistic capabilities and mutually supportive partnership in upstream as well as downstream areas of the companies leading the quest for use of oil and oil products India.
Commenting on the agreement, Sechin said, "The strategic potential of reached agreement between Rosneft, a global leader of hydrocarbon production and Essar, a world's leading player in the refining area can hardly be overestimated. The performance of the terms of the agreement will have a substantial impact on the scale of economical cooperation between Russia and India - our Company estimates that the implementation of the contract will fuel significant growth in the goods turnover between two countries. For our Indian partners the signing of this agreement represents a vital element of basic supplies diversification which, at the same time, will ensure energy security for the country. The Russian counterpart, in turn, will get the possibility of production and supplies volume planning to a new region with considerable growth potential.”
Regarding the agreement, Ruia was quoted as saying, "We are very happy to partner Rosneft, a global leader in hydrocarbon reserves and production, for long term supply of crude oil and products. This provides good long term raw material security to our refineries.”
About Essar Oil and Rosneft
Essar Oil is a completely integrated oil and gas company of a global scale with massive presence across the hydrocarbon value chain from exploration as well as production to refining and oil retail. It has made profits on a net basis of INR 226 crore in Q2 September 2014. Rosneft is the largest public sector oil and gas company in the world. Essar owns the second largest single site refineries with capacity of 20 million metric tonnes on an annual basis.
Conclusion
The agreement between India’s Essar Refineries and Russia’s Rosneft acquires significance in the light of Russia’s growing move to make deep and lasting economic partnerships with the BRIC nations. Oil and oil products have become a lucrative source of partnership for this fossil fuel based energy companies. But diversification in the area of clean and renewable energy may also help such companies to generate profits and take steps towards sustainable development.
