State oil refiners in India are negotiating long-term agreements for supplies of crude with Russian energy giant Rosneft, Bloomberg reported this week, citing people with knowledge of the matter.
According to the report, Indian Oil, Bharat Petroleum, and Hindustan Petroleum are taking part in the discussions, aiming to sign deals for a steady supply instead of one-off purchases, which is expected to make them less exposed to competition.
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The refiners reportedly want to secure deliveries of around 500,000 barrels per day of Russian oil in the contracts. They also plan to include clauses that would protect them from penalties in case of payment issues and delivery delays.
Indian Oil already has a contract with Rosneft from 2020, under which the refiner was to import 2 million tons of Urals grade crude from the Russian company per year. The deal was extended in 2023, with the two companies agreeing to substantially increase oil deliveries and diversify oil grades shipped to India. The other two state refiners do not have existing long-term contracts with Rosneft. Neither company has so far responded to requests for comment.
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India, the world’s third-largest crude oil importer, has been ramping up imports of Russian oil over the past two years despite Ukraine-related sanctions on Moscow, taking advantage of discounts that Russia offered to secure new markets after losing buyers in the West. Last year, Russia exported an average of 1.75 million barrels of crude to India per day, according to Kepler data analyzed by The Independent, dominating the Indian market as the primary supplier. While there was a drop in India’s imports of Russian oil at the end of last year, reportedly due to payment issues linked with the sanctions, analysts say that Indian demand remains strong.
Speaking to RT on the sidelines of India Energy Week on Thursday, Oil Minister Hardeep Singh Puri said that Russian oil currently accounts for 30%-34% of India’s total imports of oil, up from just 0.2% before the start of the Ukraine conflict in February 2022. He pledged that India will continue to buy Russian crude as long as the prices are favorable.