NEW DELHI: India has again pressed Russia for tax concessions for some energy assets Oil and Natural Gas CorporationBSE -1.47 % (ONGC) operates there. In a meeting with his Russian counterpart last week, oil minister Dharmendra Pradhan argued for lower taxes for Imperial Energy that ONGC has been struggling with since its purchase six years ago.
Pradhan led the Indian delegation that met with Russian energy minister on the sidelines of the Organisation of Petroleum Exporting Countri (OPEC) meeting in Vienna and proposed a tax cut for Imperial reserves, a request that has been rejected in the past.
"We told them (Russia) that if they allowed more concessions to such difficult fields, production is likely to go up. They also know by now that it's a difficult field," said Dinesh K Sarraf, chairman, ONGC, who was part of the delegation. He said the Russians may consider India's request for tax concession.
A declining output, writedowns and unavailability of certain oilfield services due to western sanctions on Russia has troubled Imperial Energy that was purchased by ONGC for about $2 billion in 2009. Imperial is now hoping a tax reduction from Russia and a quick production from the shale reserves in Bazhenov region may help boost its profit. ONGC executives say Imperial makes barely $21 on a barrel of oil sold at $100 and desperately needs tax concessions to be able to support the difficult and expensive drilling needed to survive in the Russian field. The Russian government has offered lower tax incentives to energy fields operated by some other companies. India wants that extended to Imperial as well.
During the delegation meeting, India also showed interest in picking up interests in a few more oil and gas assets, while inviting the Russian delegates to evaluate opportunities in the Indian hydrocarbon sector, Sarraf said.
At the OPEC meet, Pradhan said oil producers should sell oil at a discount to India and other major Asian countries, instead of charging the socalled Asian premium, in a sign of the country's newfound heft as a key buyer of oil in a global market where supply glut is crushing prices. "From the body language (of OPEC members) it appeared that it (the demand to scrap Asian premium) was getting registered. Indian buyers of energy from OPEC may get some price advantage," Sarraf said.