Russian oil giant, Rosneft, announced Monday that it finalized the purchase of 49% of Essar Oil Limited, an Indian refinery. Another 49% was purchased separately by a joint effort by commodities trading firm, Trafigura, and by United Capital Partners, a Russian based private investment firm. This new purchase gives Russian oil a foothold in the desirable Indian market, and speaks to larger transformations in the global oil market.
, BP , etc.). Rosneft is buying downstream operations outside of its home country to secure outlets for crude oil and to stabilize some profits during crude price fluctuations. Aramco began this process in the 1990s, building off of its domestic downstream and its Motiva investment, by participating in major downstream operations across Asia. Rosneft, and the Russian energy industry as a whole, has been working to expand and diversify similarly. The Essar purchase is a big step.
This has even included buying increasing amounts of oil from the United States. This sale of the Essar refinery shows that this diversification is a long-term plan, with essentially a long-term commitment now to purchase oil from Russia.
This refinery deal, which has the blessing of Prime Minister Narendra Modi, gives control of India’s second largest refinery to Russian interests. This is a major sign for global energy businesses that wish greater access to the India market through such investments and even to industries other than energy.
Recently, officials from several others countries, including China, the U.K., France and Austria, have made similar statements or issued regulations to create such mandates. Russia’s refinery purchase deal is the first bold statement by a major oil player that the oil industry is not too worried about EVs . For many refineries, half of their output is gasoline or diesel fuel. Russia is clearly betting that electric vehicles will not transform the India anytime soon.