GOA, India (Reuters) - India and Russia signed billions of dollars of defense and energy deals on Saturday at a summit that sought to inject new life into a relationship that has been tested by shifting global alliances and conflict in the Middle East.

India's Prime Minister Narendra Modi (R) speaks with Russian President Vladimir Putin during exchange of agreements event after India-Russia Annual Summit in Benaulim, in the western state of Goa, India, October 15, 2016. REUTERS/Danish Siddiqui

Under the biggest agreement, a group led by Russian state oil major Rosneft (ROSN.MM) said it would pay $12.9 billion for a controlling stake in both India’s Essar Oil and port facilities that it owns.

The countries, which had strong ties during the Cold War, announced plans for a joint venture to build helicopters in India. New Delhi said it would also buy surface-to-air missile systems and stealth frigates from Moscow.

“Ours is a truly unique and privileged relationship,” Indian Prime Minister Narendra Modi said after talks with Russian President Vladimir Putin in the western seaside state of Goa.

Modi said that his views were aligned with Putin’s on the unstable situation in Afghanistan and the Middle East, where Moscow is at odds with the West in the five-year-old civil war in Syria that has killed hundreds of thousands.

“We are conducting a comprehensive dialog on a wide scale of international issues, in which Indian and Russian approaches are close to each other or coincide,” said Putin.

Modi also praised Putin’s support for the fight against international terrorism, which India accuses its neighbor and rival Pakistan of sponsoring. “Russia’s clear stand on the need to combat terrorism mirrors our own,” Modi said.

MULTIPLE DEALS

The Rosneft-Essar deal will be the biggest foreign takeover in India, and Russia’s largest outbound deal, according to Thomson Reuters data.

It comes as Russia moves to reassert its role in global affairs and at a time when its own economy is stagnant, hit by Western sanctions and low oil prices.

Under the deal, a group led by Rosneft will acquire 98 percent of Essar Oil, and with it a 400,000 barrels-per-day refinery and port at Vadinar for $12.9 billion, the two sides said.

Russian state bank VTB (VTBR.MM) said it would refinance $3.9 billion owed by the Essar Group. Rosneft would pay $3.5 billion and its partners, oil trader Trafigura and investment fund UCP the same amount for an equal joint stake.

The refinery deal follows a string of upstream investments in Russia by Indian companies in recent months that, Modi said, were worth $5.5 billion.

Also on display was Russia’s nuclear prowess, with the second reactor of the Russian-built Kudankulam plant in Tamil Nadu hooked up to the grid and concrete being poured in a ceremony carried by a TV linkup to mark the start of work on the third and fourth reactors there.

Putin said that Russia would be able to build a dozen nuclear reactors in India over the next 20 years to back Modi’s growth strategy for Asia’s third-largest economy, which continues to suffer chronic power shortages.

HELICOPTERS, MISSILES, SHIPS

The defense pacts will also deepen military ties between the two countries that dates back to the Soviet era, when India entirely depended on Moscow to equip its armed forces. The United States has since taken over as India’s top arms supplier.

Indian military officials have said the plan is for the joint venture to build at least 200 Kamov 226t helicopters required by the country’s defense forces. Hindustan Aeronautics Ltd will be the local partner of Russian Helicopters and state arms exporter Rosoboronexport.

Slideshow (4 Images)

The S-400 surface-to-air missiles would strengthen India’s defenses along its borders with China and Pakistan, Indian military officials have said. Also agreed were plans to build and supply stealth frigates for the Indian navy.

Russia’s Deputy Prime Minister Dmitry Rogozin, who is in charge of space and military industries, said two frigates could be built in India and two in Russia, RIA news agency reported. Rogozin said the ships may later be equipped with missiles manufactured by BrahMos Aerospace, a venture co-owned by the Indian and Russian governments.</s>The acquisition is the biggest foreign acquisition ever in India and Russia’s largest outbound deal.

Russia’s state-controlled oil giant Rosneft and its partners today took over India’s second biggest private oil firm Essar Oil in an all-cash deal valued at about $13 billion.

Rosneft bought a 49 per cent stake in Essar Oil’s refinery port and petrol pumps, while Netherlands-based Trafigura Group Pte, one of the world’s biggest commodity trading companies, and Russian investment fund United Capital Partners split another 49 per cent equity equally.

The remaining 2 per cent is held by minority shareholders after delisting of Essar Oil.

The deal has an enterprise value of close to $13 billion, which includes Essar Oil’s debt of $4.5 billion and about $2 billion debt with the port company and power plant. Also, the near $3 billion dues to Iran for past oil purchases will continue to be on Essar Oil books.

Essar Oil, part of a steel-to-ports conglomerate controlled by the billionaire Ruia brothers, operates a 405,000-barrels-a-day refinery at Vadinar in Gujarat. The refining complex also has a captive power plant as well as a port and terminal facilities.

Essar Oil said it has signed two agreements for the sale.

“The first sale and purchase agreement envisages the sale of 49 per cent to Petrol Complex Pte Ltd (a subsidiary of PJSC Rosneft Oil Company); the second envisages the sale of the remaining 49 per cent to Kesani Enterprises Company Limited (owned by a consortium led by Trafigura and United Capital Partners) at an enterprise valuation of Rs 72,800 crore ($10.9 billion).

“An additional Rs 13,300 crore ($2 billion) will be paid for the acquisition of Vadinar Port, which has world—class storage and import/export facilities,” it said

The deal would help the Essar Group, one of India’s largest and most indebted conglomerates, trim its about Rs 88,000 crore (over $ 13 billion) debt and ward off creditor pressure.

The deal was announced as Indian Prime Minister Narendra Modi met Russian President Vladimir Putin during a meeting of the leaders of the BRICS countries here.

The deal is the single largest foreign investment in the Indian refining sector and will strengthen the ties between the world’s largest oil producer and the world’s fastest growing fuel consumer.

The acquisition is the biggest foreign acquisition ever in India and Russia’s largest outbound deal.

The all cash deal is expected to close in first quarter of 2017.</s>Leaders of BRICS nations (from left) Brazilian President Michel Temer, Chinese President Xi Jinping, Indian Prime Minister Narendra Modi, Russian President Vladimir Putin and South African President Jacob Zuma walk past sand sculptures of famous landmarks of BRICS nations created by Indian sand artist Sudarsan Pattnaik, prior to dinner hosted by Modi in Goa, India, on Saturday (AP photo)

BENAULIM, India — Indian Prime Minister Narendra Modi and Russian President Vladimir Putin signed multibillion-dollar energy and defence pacts on Saturday following talks aimed at reinvigorating ties between the traditional allies.

Modi hailed Putin as an "old friend" after their meeting in the Indian state of Goa, where leaders of the other BRICS emerging nations were also gathering for a summit.

"Your leadership has provided stability and substance to our strategic partnership," Modi said alongside Putin at a beachside resort, after officials signed up to 20 agreements between the two nations.

Modi said the pacts on jointly producing light military helicopters, building frigates and other areas of cooperation "lay the foundations for deeper defence and economic ties for years ahead".

They also signed an initial agreement on India's purchase of Russia's state-of-the-art defence system, capable of shooting down multiple incoming missiles, although there were no details on a time frame for delivery.

Putin has been seeking to seal deals with India to help revive Russia's recession-hit economy, following sliding oil prices and Western sanctions over the Ukraine crisis.

"I would like to stress that we intend to expand our bilateral cooperation not only in energy but also across a wide range of areas," Putin said.

The announced energy deals include Russian oil giant Rosneft's decision to buy almost the entire stake in India's Essar Oil for almost $13 billion.

Essar said the deal involving a group led by Rosneft was the largest single foreign direct investment in India.

The leaders also signed an agreement to supply more units to a nuclear plant in Kudankulam in southern India to meet the fast-growing economy's thirst for electricity and to reduce its reliance on dirty coal.

Modi also held talks with China's President Xi Jinping late Saturday, in the hope of boosting investment and trade. Relations, however, have been frustrated by Beijing's decision so far to block New Delhi's entry to a nuclear trade group, among other issues.

China and India, the world's two most populous nations, are jockeying for regional influence in Asia.

Modi will host a dinner for the leaders of the BRICS club — which also includes South Africa and Brazil — ahead of talks on Sunday.

BRICS was formed in 2011 with the aim of using its growing economic and political influence to challenge Western hegemony.</s>Oct 15 A group led by Russian oil major Rosneft will invest around $12.9 billion in India's Essar Oil, Chief Executive Igor Sechin told reporters on Saturday.

Sechin said a refinery and port owned by the Indian firm were worth around $10 billion and $2.9 billion respectively.

India and Russia signed a deal on Saturday to pave the way for a group led by Rosneft to acquire Essar.

Officials from Russian lender VTB, which is giving Essar $3.9 billion in credit for debt reconstruction, said Rosneft would pay around $3.5 billion for its stake in Essar, the same amount as European trader Trafigura and Russian fund UCP.</s>India and Russia on Saturday signed a deal to pave the way for a group led by Russian oil major Rosneft ( ) to acquire India's Essar Oil.

The group will acquire Essar Oil ESRO.CL in a deal worth $12 billion to $13 billion, including debt, two sources privy to the deal told Reuters.

Russian lender VTB ( ) will give Essar $3.9 billion in credit for debt reconstruction, VTB Chief Executive Andrei Kostin said on Saturday.</s>Indian Prime Minister Narendra Modi and Russian President Vladimir Putin are set to sign lucrative energy and defence deals Saturday, aimed at shoring up economic ties between the long-time allies.

Putin was greeted with a military band and traditional dancers after arriving in the Indian tourism state of Goa for talks with Modi ahead of a BRICS summit.

Other heads of the BRICS club of leading emerging nations — Brazil, China and South Africa — were also gathering for this weekend’s summit that is expected to focus on trade and counter-terrorism.

Putin is seeking to seal deals with India in an attempt to help revive Russia’s recession-hit economy, following sliding oil prices and Western sanctions over the Ukraine crisis.

Among the agreements expected are Moscow’s delivery of its most advanced anti-aircraft defence system to India, a deal that has been in the pipeline for several years.

India, the world’s top defence importer, is undergoing a $100-billion upgrade of its Soviet-era military, as it looks to protect its borders from arch-rival Pakistan and an increasingly assertive China.

But India has increasingly turned to the United States, rather than Russia for its hardware in recent years, as Modi cultivates closer ties with the Washington.

Nevertheless, India’s ambassador to Russia, Pankaj Saran, hailed the “special and privileged” partnership between the two nations.

“It is very deep and very intense and it is poised to grow even further,” Saran told reporters before the talks got underway.

The leaders are also focusing on energy deals to meet India’s growing thirst for fuel and electricity for its fast-growing economy.

Russia’s biggest oil company Rosneft is expected to acquire India’s Essar Oil in a multi-billion-dollar deal, according to local media reports, quoting officials involved in the agreement.

The leaders are also expected to sign a framework agreement to supply two more reactors to a nuclear plant in Kudankulam in southern India.

Saran said they would also likely discuss India’s tensions with neighbour Pakistan, which spiked after last month’s attack on an Indian army base that killed 19 soldiers.

Modi has sought to isolate Pakistan internationally since the attack that India blamed on Pakistan-based militants.

India said it subsequently carried out strikes against militants over the border in Pakistan, prompting a furious response from Islamabad.

But Putin is seen as unlikely to weigh into the dispute between the rivals, as Moscow also eyes closer defence ties with Islamabad. Russia and Pakistan carried out their first joint military exercise last month.

In beachside Goa, the two leaders will reach agreement on Moscow’s delivery of the S-400 Triumph defence system, Russian news agencies have quoted a Putin aide as saying, without detailing a timeframe.

The S-400 is Russia’s most modern air defence system and has been deployed to Syria, where Moscow is conducting a bombing campaign in support of President Bashar al-Assad.

The strong ties between India and Russia date back to the 1950s after the death of Stalin. But trade has slipped from just $10 billion in 2014, which both sides have said is not good enough.

Modi will also hold talks with China’s President Xi Jinping late Saturday, in the hope of boosting investment and trade, but with relations frustrated by Beijing’s decision so far to block New Delhi’s entry to a nuclear trade group, among other issues.

China and India, the world’s two most populous nations, are jockeying for regional influence in Asia.

Modi will also host a dinner for the BRICS leaders, ahead of the summmit talks starting on Sunday at a plush beachside resort.

BRICS was formed in 2011 with the aim of using its growing economic and political influence to challenge Western hegemony.</s>Sechin said a refinery and port owned by the Indian firm were worth around $10 billion and $2.9 billion respectively.

India and Russia signed a deal on Saturday to pave the way for a group led by Rosneft to acquire Essar.

Officials from Russian lender VTB ( ), which is giving Essar $3.9 billion in credit for debt reconstruction, said Rosneft would pay around $3.5 billion for its stake in Essar, the same amount as European trader Trafigura and Russian fund UCP.</s>Iran has some tough new competition in the race to capitalize on India's booming demand for oil.

State-owned Russian energy giant Rosneft is the lead investor in a $12.9 billion buyout of India's Essar Oil that was announced over the weekend. Russian investment group United Capital Partners (UCP) has also snapped up a stake.

The purchase of the oil refiner gives Russia more muscle in India at a time when its demand for energy is booming.

"Rosneft is entering one of the most promising and fast-growing world markets," CEO Igor Sechin said in a statement.

India is already the world's third-largest oil importer, and its demand will jump by more than 300,000 barrels per day this year, according to the International Energy Agency. That's more than any other nation.

It's a trend that has attracted other top crude producers -- especially Iran.

Iran has been upping its oil production since it was freed from sanctions in January. Much of the crude has been sold to India, which maintained close ties with Tehran while the trade restrictions were in place.

India is well positioned as a buyer because many of its refineries were built to process Iranian-grade crude.

But Rosneft's purchase of Essar Oil will complicate Iran's play.

Roughly 40% of the crude imported from Iran was refined at Essar Oil's massive refinery in the state of Gujarat.

Now that the refinery is under new ownership, it's likely to be processing more shipments from Russia.

Lalit Kumar Gupta, Essar Oil's chief executive officer, told Bloomberg in August that shipments from Iran would decline if Rosneft bought a stake in the Indian firm.

"When they are on board we will see how much to buy, what to buy," he said.

Now, Iran might need to find new buyers in a global market already saturated with supply.</s>The $12.9 billion sale of India's Essar Oil to a group led by Russia's Rosneft does not run foul of US sanctions imposed against the majority state-owned Russian energy firm, parent Essar Group's CEO said on Sunday.



 The sale, which was signed on Saturday. It is the biggest foreign acquisition ever in India and Russia's largest outbound deal.



 The deal that will give Rosneft, commodities trading house Trafigura and private investment group United Capital Partners a 98 per cent stake in Essar's oil arm is "US-sanctions compliant," said Essar Group's chief executive, Prashant Ruia.



 He said the deal did not violate the economic sanctions imposed by the US government on Russian entities over Russia's role in the Ukraine crisis. “The way it is structured, it is fully compliant. We are well within the rules that govern Russian companies.”



 Essar, controlled by the billionaire Ruia brothers, has interests in oil and gas, steel, ports and power, and has been under pressure from its lenders to reduce debts.



 “It was an emotional decision, it was a very tough decision. It was difficult decision for people involved in the company and those who were involved in the business and building it,” said Ruia in an interview with Reuters on Sunday.



 “We felt all in all, we were getting attractive valuations and we decided to sell.”



 Essar plans to use proceeds from the sale to offset some 50 per cent of the debt on its group companies after the deal is completed.



 Ruia said the parent company's debt would be cut by some $5 billion and a further $5 billion would go towards trimming debt at the operating company level.



 Some of the proceeds from the transaction will be pumped into existing businesses, said Ruia, adding that the group does not have any plans to sell any of its other businesses in the future or any plans to de-list them to gain more control.



 Debt-laden Essar Steel, which owns a 10 million tonne steel plant in the western state Gujarat, carries debt of over $5 billion and had been seeking to restructure its debt.



 Ruia said Essar is working closely with the banks to work out a restructuring plan and some of the funds raised via the sale of Essar Oil would go into restructuring the operations of Essar Steel.</s>The state-backed Russian Direct Investment Fund (RDIF) will work with an Indian fund to invest $1 billion in Asia's third-largest economy, the head of the fund said before a bilateral summit expected to yield several big business deals.

The RDIF and India's National Investment and Infrastructure Fund (NIIF) will each invest up to $500 million in the joint fund, replicating partnerships the Russian entity has with countries like China.

“We helped in the process of the NIIF being created,” RDIF CEO Kirill Dmitriev said in an interview with Reuters. “Now we will provide equity capital to joint Russian-Indian projects, mainly in India.”

The RDIF was set up by Dmitriev in 2011 with billions in Kremlin cash and has since made partial exits from bets in Russia, including the Moscow Stock Exchange, diamond miner Alrosa and Rostelekom.

It also worked with Indian infrastructure investor IDFC to invest $1 billion in power projects when President Vladimir Putin last visited India in late 2014.

India is courting international investors to help finance new roads, railways and power projects that the country needs.

Putin will meet Indian Prime Minister Narendra Modi in the tourist destination of Goa on Saturday for a summit at which major defence, oil and nuclear power agreements are expected to be signed.

The RDIF-NIIF partnership will also be sealed at the summit. It will address around 20 investment proposals and seek to strike its first deals in 2017, said Dmitriev.

Leaders of the BRICS caucus - Brazil, Russia, India, China and South Africa - will also gather in Goa this weekend. The bloc has founded its own New Development Bank that has co-invested in two RDIF-backed hydropower plants in Russia that have just broken ground.

Dmitriev said he hoped that the Russian fund would be able to draw on the platform of the BRICS bank to build similar small-scale hydro projects in India that are based on Russian technology.
Indian Prime Minister Narendra Modi and Russian President Vladimir Putin sign several agreements including a $12.9 billion defense and energy deal. Russian state oil major Rosneft pays for a controlling stake in both India's Essar Oil and port facilities that it already owns.