India is looking at an alternative maritime route for oil imports from Vladivostok in Russia’s far eastern region, through the South China Sea and the Malacca Strait, as tensions between Iran and the U.S. are affecting supply through the current sea route, Business Standard reports.
According to the newspaper, the issue will be discussed during Indian Prime Minister Narendra Modi’s visit to Russia next week. Modi will be attending the Eastern Economic Forum in Vladivostok from September 4 to 6.
Analysts say the new route is likely to make investment by companies like ONGC Videsh (OVL) viable in Russia, while cutting the time needed to supply liquefied natural gas (LNG) and crude oil to India.
“It makes sense to diversify ourselves (India), not just in terms of finding alternate sea trade routes but also ports. A dual sea trade route will surely help India in the long run,” said Hitesh Avchat, senior manager, CARE Ratings.
The proposed route will give an added advantage to India in terms of time and distance from the major ports of Chennai, Mumbai and Vishakhapatanam. The existing route to St Petersburg from Chennai (8,553 nautical miles) via the Suez Canal takes 35 days and 15 hours, while the one to Vladivostok (4,593 nautical miles) can be covered in 19 days.
In the past three years, Indian companies including OVL, Indian Oil Corporation, Oil India and Bharat Petro Resources have jointly acquired hydrocarbon assets worth $4.85 billion in Russia. This included acquisitions in the Vankor and Taas Yuryakh assets, making Russia one of the most lucrative overseas oil and gas destinations for Indian companies. Russian major Rosneft has invested in India by buying a majority stake in Essar Oil, for $12.9 billion.
Modi will be holding an annual bilateral summit with Russian President Vladimir Putin as part of his visit. Ahead of the meeting, Union petroleum minister Dharmendra Pradhan reached Moscow on Thursday for a two-day visit. He will be meeting Russian energy minister Alexander Novak.