Via The Financial Times, an article on India’s Oil and Natural Gas Corporation’s quest for Russian oil assets, in particular its consideration of an equity tie-up with Sistema, Russia’s fastest growing oil company.  As the report notes:

“…ONGC has made no secret of its desire to acquire Russian oil assets to ease India’s dependence on Middle East supplies. So far its Russian portfolio includes a minority stake in the Sakhalin 1 oil project in the Pacific and Imperial Oil, an oil company in west Siberia it bought for $2.4bn last year in a deal that analysts said was overpriced.

Taking a more adventurous tack, ONGC has inked a framework agreement with Sistema that paves the way for the two companies to share equity in their Russian oil assets and consider joint operations in other countries. The pact was clinched while Dmitry Medvedev, the Russian president, was in India this week, signaling the Kremlin’s blessing for the deal.

Controlled by Russian billionaire Vladimir Yevtushenko, Sistema is best known for its telecoms, high tech and consumer assets, but is widely seen as the rising star in the Russian oil industry. Analysts have said that Yevtushenko’s Kremlin connections  helped Sistema last year to acquire Bashneft, an oil production and refining company, previously controlled by the government of the Russian region of Bashkiria.  Sistema has added to its oil portfolio this year buying a 49-per-cent stake in oil producer Russneft and breezing to victory in an uncontested tender of the huge Trebs and Titov oilfields in the Russian Arctic.

Analysts see the ONGC-Sistema deal as positive for the Russian group. “We believe the agreement with ONGC further substantiates our expectations that 2011 will be an important year in the further development of Sistema’s energy assets,” Deutsche Bank said in a research note on Thursday.

“We see the fact that the framework agreement was signed during the Russian president’s official visit as positive, as it supports our view that the Russian government supports some of Sistema’s key projects.”

Industry sources said Sistema was looking for international partners to support its plans to grow into a big league oil producer with interests in Russia and abroad.

ONGC may well fit the bill for Sistema, but the history of foreign oil equity partnerships in Russia must give the Indian company pause for thought.

When ConocoPhillips bought a 20 per cent stake in Lukoil in 2007, it thought a tie up with one of Russia’s most powerful oil companies would open up exciting upstream opportunities in the former Soviet Union. But it was proved wrong and decided to sell the stake this year.

BP has made a fat profit as a 50-per-cent partner in TNK-BP, the Anglo-Russian oil major founded in a groundbreaking equity deal in 2003. But the relationship with its Russian co-investor led to legal strife including an acrimonious dispute over management in 2007 that forced Robert Dudley, then TNK-BP’s chief executive, to flee Russia.”