Via Energy Daily, an interesting report on the growing linkages between India and Russia through petroleum.  As the article notes:

“…While India and China have booming economies, they share the similarity of both being energy-deficient and relying on imports. India is casting eyes across the Hindu Kush and is considering developing energy ties with its fellow BRIC member Russia. If initial reports are anything to go by, however, Russia’s Gazprom will face protracted negotiations with New Delhi and demands that are significantly different from those it has encountered before.

Initial contacts between Gazprom and India’s Oil and Natural Gas Corp. Ltd. date back to 2005, when the two companies signed a memorandum of understanding on joint ventures in Russia, India and unspecified third countries, but little of substance has been accomplished up to now. Unlike its state-owned partner Gazprom, ONGC is a publicly traded company. ONGC has a massive footprint in the Indian market, producing 77 percent of India’s oil and 81 percent of its natural gas. Until the recent global slump in energy prices, ONGC was India’s most profitable corporation.

In the complicated minuet of negotiations between the two energy giants, ONGC proposed Russian participation in one of New Delhi’s most cherished energy projects, the long discussed $3.5 billion, 1,050-mile Trans-Afghan Pipeline (TAP, now “TAPI” with the inclusion of Pakistan and India), originally proposed in March 1995, when Turkmenistan and Pakistan signed a memorandum of understanding. As envisaged, TAP, with an annual carrying capacity of 33 bcm of Turkmen natural gas, would run from Turkmenistan’s Dauletabad gas field across Afghanistan and Pakistan and terminate at the Indian town of Fazilka near the Indian-Pakistani border. India optimistically considered that along with Turkmenistan, Russia might become one of TAPI’s potential suppliers, and Azerbaijan, Kazakhstan and Uzbekistan as well.

For all the enthusiasm in Ashgabat and New Delhi for TAPI, the line currently remains the unlikeliest of the major foreign investment projects proposed for the export of Central Asian gas, if for no other reason than the ongoing turmoil in Afghanistan. When the recent terrorist attacks in Islamabad and Mumbai are factored in, along with slumping global energy prices, TAPI would seem to be the ultimate investor long shot.

Further complicating India’s interests, Gazprom has long coveted Central Asia’s natural gas reserves for adding to its European export volumes. Accordingly, during Russian President Dmitry Medvedev’s visit to India on Dec. 4-5, however, no natural gas agreements were initialed, and the joint Russo-Indian declaration subsequently issued stated only that Russian and Indian officials would support their oil and gas companies in concluding mutually acceptable agreements on energy extraction and processing activities.

If TAPI is at present largely stalled, India is still dangling its massive market before the Kremlin, but with an important caveat, with its government stating it is prepared to provide Russian energy firms access to projects in India only if in return Indian energy firms have a reciprocal opportunity to participate in extracting and developing Russia’s energy reserves. Russian investors are keenly interested in the opportunities provided by potential access to consumers in the world’s largest democracy. India’s population of 1.1 billion is second only to China’s 1.3 billion and contrasted with Russia’s 140 million represents a potential domestic market eight times larger than Russia’s, a market too lucrative to ignore.

The interest in bilateral cooperation has hit a number of snags, with Russia’s largest privately owned producer, LUKoil, suspending negotiations with its Indian partners. In a possible triumph for New Delhi’s policies of an investment

stake in Russian energy projects, Rosneft recently reported it is considering the possibility of selling a 25.1-percent interest in the Sakhalin-3 Veninsky prospect to ONGC, as it rejected an earlier bid by Britain’s Imperial Energy. Other possible ONGC-Russian ventures include partnering with Gazprom in constructing the Novourengoi gas chemical plant and marketing the plant’s products. Besides exports, Russian energy firms are also expressing an interest in pursuing downstream activities in the subcontinent, with a number of Russian firms also expressing an interest in refining in India.

While the current economic crisis has induced a prolonged bout of navel-gazing by Western economies, it risks overlooking the massive import of the BRICs’ future impact not only on the evolving global economy, but also on how the four nations’ economies are integrating to further propel that impact. European analysts preoccupied with Russia’s growing dominance of its energy market and Gazprom’s seeming invincibility should take careful notes of New Delhi’s energy chess game moves with the Kremlin; after all, the game originated there 14 centuries ago.”