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29-05-2024
Bureau Report + Agencies
NEW DELHI: India’s Reliance Industries (RELI.NS), opens new tab, operator of the world’s biggest refining complex, has signed a one-year deal with Russia’s Rosneft to buy at least 3 million barrels of oil a month in roubles, four sources aware of the matter told media
The shift to rouble payments follows Russian President Vladimir Putin’s push for Moscow and its trading partners to find alternatives to the Western financial system to facilitate trade despite US and European sanctions.
A term deal with Rosneft also helps privately run Reliance to secure oil at discounted rates at a time when the OPEC+ group of oil producers is expected to extend voluntary supply cuts beyond June.
The OPEC+ group comprising the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia is due to discuss the output cuts in an online meeting on June 2.
India, the world’s third-biggest oil importer and consumer, has become the biggest buyer of seaborne Russian crude since the West halted purchases and imposed sanctions against Moscow in the aftermath of Russia’s 2022 invasion of Ukraine. India has also paid for Russian crude in rupees, dirhams and Chinese yuan.
State-owned Indian refiners, meanwhile, have been tapping spot markets for Russian oil because they were unable to finalize term supplies for this year, Reuters has reported previously.
“India is a strategic partner for Rosneft Oil Company,” the Russian company said in an emailed response to questions from Reuters, adding that it does not comment on confidential agreements with partners.
“Cooperation with Indian companies includes projects in the field of production, oil refining and trading of oil and petroleum products.”
Rosneft also said that commercial approaches to determining the value of sold crude are the same for all companies, regardless of whether they are private or state-controlled.
Reliance did not respond to a request for comment.
Under the terms of the deal, which took effect at the beginning of the Indian financial year from April 1, Reliance will buy two cargoes of about one million barrels of Urals crude with an option to buy four more each month at a discount of $3 a barrel to the Middle East Dubai benchmark, the sources said.
The refiner will also purchase one to two cargoes a month of low-sulphur crude oil, mainly ESPO Blend exported from Russia’s Pacific port of Kozmino, at a premium of $1 a barrel to Dubai quotes, the sources added.
Reliance has agreed to make payment for the oil using Russia’s rouble through India’s HDFC Bank (HDBK.NS), opens new tab and Russia’s Gazprombank (GZPRI.MM), opens new tab, the sources said. Further details on the payment mechanism were not immediately available.
HDFC Bank and Gazprombank did not respond to requests for comment.
Last month, Rosneft (ROSN.MM), opens new tab and Indian Oil Corp (IOC.NS), opens new tab have yet to renew an oil supply deal that expired in March as they have been unable to agree on price and volumes, forcing India’s top refiner to turn to spot markets, three sources with knowledge of the matter said on Monday.
IOC and Rosneft renewed the annual oil deal for a second time a year ago. It was originally signed during Russian President Vladimir Putin’s visit to India in December 2021, months ahead of Moscow’s military action in Ukraine.
State-run IOC’s term contract with Rosneft expired on March 31, two sources said.
“The deal for 2024-25 has not been renewed,” said one of the sources.
