Thursday, 11 December 2014

Putin Pledges Oil, Weapons and Nuclear Power for Modi in India - Businessweek

Debarjun Saha | 04:41 |

Russian President Vladimir Putin pledged to supply India with oil, weapons and nuclear power reactors, buttressing a long-time friendship with Asia's third-biggest economy as ties deteriorate with the West over Ukraine.

Prime Minister Narendra Modi reassured Putin, who is on a visit to Delhi, that India opposes sanctions against Russia. He also said Russia remains India's most important defense partner and welcomed Putin's offer to make one of its most advanced helicopters in the country.

"The character of global politics and international relations is changing," Modi told reporters in New Delhi in a joint briefing with Putin. "However, the importance of this relationship and its unique place in India's foreign policy will not change."

Putin is seeking new markets for its oil and natural gas as the nation's faltering relations with the U.S. and Europe amid the Ukraine conflict prods it toward a recession. Russia's ruble extended its worst rout in 16 years today even after the Bank of Russia raised its key rate for the fifth time this year.

Russia holds the world's second-biggest natural gas reserves and is among the globe's biggest oil producers. Among the agreements today was a 10-year deal that will raise Indian imports of Russian oil almost 40-fold from current levels.

The two nations plan to study the possibility of building a hydrocarbon pipeline system connecting India and Russia, according to a joint statement from Putin and Modi. Earlier this year, gas exporter OAO Gazprom reached a $400 billion deal with China to build a pipeline and start supplies after more than a decade of talks.

'Ambitious Agenda'

Moscow-based OAO Rosneft plans to ship as much as 10 million tons of oil per year, or about 200,000 barrels a day, to India's Essar Group, Rosneft Chairman Igor Sechin told reporters in New Delhi. Essar operates a 400,000-barrel-a-day refinery on the western coast of Gujarat.

That would have an annual value of roughly $7.4 billion based on this year's average Brent crude price. India imported less than 0.1 percent of its crude oil from Russia in the year ended March, a mere 0.27 million metric tons.

"Russia is the world's top source for hydrocarbon resources," while India's one of the largest importers, Modi said. "Our collaboration in this sector has been disappointing. We will set an ambitious agenda for partnership in oil and natural gas."

Nuclear Plants

The two nations also agreed to identify a new site for Russian reactors and to jointly construct nuclear power plants in other countries. India and Russia agreed in 2008 to build 12 nuclear reactors and one has been completed at Kudankulam in southern Tamil Nadu state.

Construction of more Russian reactors beyond that will be considered depending on India's future power demands, according to a joint statement.

India's 20 nuclear generators provide less than 2 percent of the nation's power capacity. The government seeks to boost that by nearly 13 times to 62 gigawatts by 2032.

"In this field, we have moved to a different level of cooperation," Putin said. "It's not just trade in services or goods, or even technology, it's the creation of an industry, a new industry for India."

Economic ties between India and Russia are largely limited to arms transfers, and those have decreased over the past few decades. While the Soviet Union was India's largest trading partner in 1981, Russia wasn't among its top 15 commercial partners last year, according to data compiled by Bloomberg.

Russia and the Soviet Union have been India's biggest weapons suppliers, accounting for about 70 percent of its arms imports since 1950, according to data compiled by the Stockholm International Peace Research Institute. The U.S. surpassed Russia as India's top supplier of defense equipment in the three years to March, according to Indian government data.

To contact the reporters on this story: Natalie Obiko Pearson in New Delhi at npearson7@bloomberg.net; Stepan Kravchenko in Moscow at skravchenko@bloomberg.net

To contact the editors responsible for this story: Daniel Ten Kate at dtenkate@bloomberg.net Tony Halpin



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