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22 January 2015, Eurasia Review

SHOULD INDIA’S ONGC BUY RUSSIA’S ROSNEFT? – ANALYSIS

Amit Bhandari, Author, Energy and Environment Fellow, Gateway House has written an article on the low oil prices fueling India to invest in oil companies such as Rosneft, since it has oil and gas production of 5 million barrels per day. This article has been republished by Eurasia Review

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When oil prices started to hit new peaks in 2004-05, international big oil was one of the first to be blamed. The public perception was that for years oil majors such as ExxonMobil, BP, and Shell had found it more profitable to drill oil in Wall Street rather than in oil fields. Translated, it means that given low oil prices and their high cost structures, the oil majors found it more profitable to buy out smaller exploration firms which were drilling, rather than explore on their own. The $100+/barrel prices put an end to that era, as exploration became worthwhile.

Those happy days may be back again, and may present a once-in-a-generation opportunity for India. Lower oil prices have pushed down the values of oil companies by over 50%, giving India a chance to acquire assets cheap. This is a smart way to hedge our economy against future increases in energy prices.

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