As international players refuse to deal with Moscow over its invasion of Ukraine, India is looking to increase its Russian oil imports, with state-owned refiners eager to take more heavily discounted supplies from Rosneft PJSC.
According to people familiar with the companies’ procurement plans, state processors are working together to finalize and secure new six-month supply contracts for Russian crude to India. Cargoes are being sought on a delivered basis from Rosneft, with the seller set to handle shipping and insurance matters, they said.
These supply agreements, if concluded, will be separate and on top of shipments that India already buys from Russia via other deals. The persons who asked not to be identified because the conversations are private claimed that details on volumes and pricing are still being negotiated with Indian banks poised to fully fund all cargoes. They noted that as large international merchants such as Glencore Plc wind down their deals, Indian refiners will increasingly purchase straight from Russian enterprises such as Rosneft.
Indian Oil Corp, Hindustan Petroleum, and Bharat Petroleum are state refiners, while Reliance Industries and Nayara Energy, which is partly controlled by Rosneft, are private refiners. Procurement for both public and private companies is handled independently. When questioned about the situation, spokespeople for the three main state-owned firms couldn’t immediately comment.
Indian refineries, both public and private, have increased their purchases of Russian crude as a result of US, UK, and European Union sanctions and trade restrictions, which have driven most purchasers to flee and offer levels to plummet. Last month, an unprecedented amount of Russian crude was on its way to India and China as European customers sought for substitutes, looking as far as the United Arab Emirates for alternatives. Since late February, when Russia invaded Ukraine, the resulting panic and rerouting of global oil flows has boosted oil by more than 20%.
Refiners in Asia’s second-largest oil consumer have seen increased profits from converting cheap crude into fuels that are sold both locally and to clients in Europe and the United States. India’s overall crude oil feedstock basket includes Russian crude as well as other long-term and spot acquisitions from the Middle East and Africa.
According to the sources, the projected increase in Russian crude purchases will have an impact on the South Asian country’s spot imports. According to Bloomberg projections based on trade data, India purchased more over 40 million barrels of Russian oil between late February and early May, which is roughly 20% more than flows for the entire year of 2021. According to Kpler data, Russian oil arrivals into India in May were 740,000 barrels per day, up from 284,000 barrels in April and 34,000 barrels a year ago.
Despite the fact that India’s purchases of Russian crude are not unlawful or in violation of any sanctions, the Biden administration and the EU have pressured the country to stop doing business with Moscow in order to cut off the Kremlin’s access to oil earnings and money. The Asian nation has emphasised that Russian imports are insignificant in comparison to European purchases, accounting for only a small portion of the country’s total consumption.
Discounted Russian oil has brought some comfort to India, which imports over 85% of its oil, just as inflation and the cost of everything from food to fuel is skyrocketing. Access to low-cost crude is already boosting India’s oil imports, which increased by nearly 16 percent in April over the previous year.
According to figures from the oil ministry, the share of oil from the Eurasian region, which includes Russia, increased to 10.6 percent in April from 3.3 percent a year earlier.
Featured Image: Wikimedia Commons
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