Posted on 01/13/2005 7:39:39 PM PST by Destro
India bids $2 Billion for part of Russian oil giant Yukos – a jackpot victory over China or a bid to win Russian Roulette?
Balaji Reddy, Special Correspondent
January 13, 2005
India’s Oil and Natural gas Corp (ONGC) is bidding to take a stake of 15% on Russian oil giant Yukos now reorganized, nationalized and known as Yugansk.
ONGC with market capitalization of US Dollar 25 Billion is also ready to provide the Russian oil giant a similar amount in loan.
India imports 70% of its oil from the world and the growing middleclass of India does not understand that they must conserve oil for the sake of the country. Indians are buying and using their huge disposable incomes to drive cars, use new gadgets and so on. The extended family and little need to pay huge mortgage makes it possible for a young man or woman in India to own a car in their twenties and spend money on Petrol (gasoline). In India Petrol is 100% more costly than in America when converted to current US Dollar rate of 1 US Dollar = Rs. 46.
If ONGC of India gets this stake in Russian oil giant it may be a jackpot and a major and rare win for India over its Chinese oil giant. International think tanks say, it is very difficult to bid against Indian state owned corporations because they tend to have unlimited funds. Do not get surprised if India really draws funds from Forex reserves to pay for it in case the Chinese oil company pushes the bid higher.
Yugansk produces approximately 1% of world oil. This can be a major homerun for India that needs to acquire major oil reserves in the world. According to sources inside the India’s Petroleum Ministry, Russia is the most reliable source that is friendly to India.
But Western Investment Bankers are cautioning anyone who is planning to eye this Russian oil giant. According to them this can be a Russian roulette India is forced to play and Chinese very shrewdly may smile and pass this time. India may find later that it has to pay huge amounts due to lawsuits coming from the former owners of Yukos who are already threatening.
India may have struck a secret deal with Putin that will provide a new chapter in India Russia energy cooperation. As mentioned in India Daily a few days back, we have entered a phase where energy and trade will make and break super powers.
The oil deal can be either a total win for India or can be a bummer. But sometimes you have to gamble to get forward in a super competitive world.
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