With the tension between Iran and the US impacting movement of oil cargo, India is looking at an alternative maritime route via Vladivostok port in Russia's far eastern region, through the South China Sea and Malacca.
The issue will be discussed during Prime Minister Narendra Modi's visit to Russia starting September 4. Modi will be attending the Eastern Economic Forum in Vladivostok from September 4 to 6.
This comes amid high tension between Iran and European countries in the Strait of Homuz last month. Iran even deployed two warships in the region.
"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.
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.
In the past three years, Indian companies including OVL, Indian Oil Corporation, Oil India and Bharat Petro Resources hace jointly acquired hydrocarbon assets worth $4.85 billion (close to ~35,000 crore) 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.
A government official said the new shipping route would open up more investment opportunities for Indian oil and gas companies.
In 2001, OVL bought a 20 per cent stake in the Sakhalin-1 project in far eastern Russia. In 2006, India got its first crude oil cargo from Sakhalin, at the Mangaluru port. OVL later bought stake in Imperial Energy, too.
Pradhan will also meet the Deputy Prime Minister of the Russian Federation and the presidential plenipotentiary to the far east of Russia, to discuss potential collaborative activities identified by Indian companies during their visit to the region earlier this month.