The curious case of Russian oil deals that benefited Essar, hurt ONGC

When Russian President Vladimir Putin visited Delhi in December 2014, his camaraderie with Prime Minister Narendra Modi was widely noted. What received less attention were the curiously asymmetric deals that an oil company controlled by the Russian government went on to sign with Indian companies over the next two years.

First, between September 2015 and October 2016, Kremlin-controlled Rosneft sold 49.9% in its Vankor oilfield in the northern parts of eastern Siberia to Indian public sector oil companies. According to oil and gas experts in Russia and India, the Indian companies significantly overpaid Rosneft.

Towards the end of these transactions, in October 2016, Rosneft announced its purchase of a refinery and port owned by the Essar Group in Gujarat. The price surprised observers in both Russia and India – it was much higher than initial valuations.

Reuters reported it was the biggest-ever foreign acquisition in India and Russia’s largest outbound deal. It rescued debt-ridden Essar Oil from bankruptcy. It also gave Rosneft access to the large Indian market at a time it faced sanctions slapped by the United States in 2014 as retaliation for Russia’s annexation of Crimea in Ukraine.

But what about India’s government-owned oil companies?

Did they gain at all?