India to Bid for Share in Russia’s Arctic Oil Reserves

A recent press release from India’s leading firm for oil and natural gas, Oil and Natural Gas Corporation (ONGC) shows India to bid for share in Russia’s Arctic oil reserves. ONGC is the only foreign company that will be placing bids for Russian oil deposits, and will be bidding through its Russian subsidiary company, Nord Imperial. The area that ONGC will be bidding on, which includes parts of the Trebs and Titov regions, holds oil reserves estimated to total at about two hundred million tons.

The Minister of Natural Resources for Russia said that although the oil reserves in these regions is classified as a “strategic resource” (as opposed to a luxury or economic resource), the Russian government will be allowing ONGC to bid, but the Russian government will most likely be going with a national company. Some sources suggest that ONGC could be planning to partner up with Rosneft. Because of the rapid rate at which domestic demand for oil is rising in India, the Indian government has been looking into a number of foreign oil reserves for consideration. Coal and oil reserves around the world have been looked at by the Indian government with the intention of expanding the amount of resources it can acquire.

ONGC Rescue Boat

The Indian government has also begun plans for creating a sovereign wealth fund, in order to help cover the financial needs of companies owned by the state, such as ONGC, as well as Indian Oil Corporation and Oil India Limited. Each of these companies bid for various types of energy assets (such as oil, gas, and coal) around the world. In 2009, China spent roughly thirty-two billion dollars on energy and resource acquisition around the world. In contrast, India spent only roughly two billion dollars.

With India to bid for share in Russia’s Arctic oil reserves, the landscape of Indian energy production could change drastically within the next decade. The increased amount of natural resources coming into India could dramatically alter the way the Indian economy functions. The Indian government is currently considering reviving its natural gas plan with Iran, and may also be taking a stake in BP’s (British Petroleum) holdings in Vietnam. The economic push between China and India could spur some interesting and possibly controversial decisions regarding energy acquisition within the next few years, and the way these two countries get their energy could make an impact on even the global market.