Saudi Arabia Mulls Marketing Russian LNG in India

Saudi state-owned Saudi Aramco is open to the idea of marketing some of the LNG from the proposed Russian Arctic LNG 2 project in India, according to Saudi energy minister Khalid Al-Falih, who was speaking October 15 at the India Energy Forum by CERAWeek in Delhi.

“Aramco has the mandate to go global and not only invest in downstream but also invest in gas and LNG. We have looked at projects in Africa and the Mediterranean, and of course the Arctic with some Russian companies, Novatek. The idea is that Aramco will trade that [LNG] globally and bring some of that to India and other markets,” Al-Falih said.

Last week Mark Gyetvay, Novatek CFO and deputy chairman, told the Oil & Money conference in London that Saudi Aramco was among the companies to have visited the data room for the planned Arctic LNG 2 project. Eight months ago Saudi Aramco and Novatek signed a memorandum of understanding that included possible LNG co-operation.

But Indian companies are also eyeing a direct role in Arctic LNG 2, which would bring them into a competition with Saudi Arabia for the Indian market that they would be likely to win, or at least draw. Earlier this month Russian president Vladimir Putin during his India visit said that Russia is ready to consider the possibility of co-operation with India in the field of LNG. "We welcome the interest of Indian energy companies in expanding their business in Russia. We are ready to consider the possibility of co-operation within the framework of such projects as Far East LNG, Arctic LNG 2, as well as other projects for development of natural resources of Siberia, Yamal and the continental shelf in the Russian Federation," said Putin October 5, after talks with Indian prime minister Narendra Modi.

Indian state-owned firms already have substantial presence in the Russian oil and gas space. ONGC Videsh (OVL), the overseas arm of ONGC, bought a 20% stake in the Sakhalin-1 project in 2001 and then bought Imperial Energy a few years later. In 2016, OVL completed the acquisition of 15% equity in Vankorneft for $1.268bn. In a follow-up deal, it bought a further 11% stake in Vankorneft. OVL now holds a 26% interest in Vankorneft, while an Indian consortium of three other state firms – Oil India, Indian Oil Corporation and Bharat Petro Resources –holds 23.9%; Rosneft continues to hold the other 50.1%.