India is looking to double its Russian oil imports with state-owned refineries eager to take more discounted supplies from Rosneft PJSC as international players reject deals with Moscow over the invasion of Ukraine.
State processors are jointly working to finalize and secure new six-month supply contracts for Russian crude to India, people with knowledge of the companies’ sourcing plans said. Freights are being sought on a Rosneft basis, with the seller handling shipping and insurance issues, they said.
These supply agreements, if concluded, will be separate and in addition to the shipments India is already purchasing from Russia through other deals. Details on volumes and prices are still under negotiation with Indian banks that will fully fund all freights, said the people who asked not to be identified as the talks are confidential. Indian refiners will increasingly source directly from Russian companies such as Rosneft as top international traders such as Glencore Plc close their trades, she added.
State-owned refineries include Indian Oil Corp, Hindustan Petroleum and Bharat Petroleum, while private processors include Reliance Industries and Nayara Energy, which is partially owned by Rosneft. Purchasing activities for state and private companies are carried out independently. Spokespersons for the three largest state-owned companies were unable to immediately comment when contacted about the matter.
Both state and private refiners in India have ramped up purchases of Russian crude as sanctions and trade restrictions by the US, UK and European Union have caused most buyers to flee and supply levels plummet. An unprecedented amount of Russian crude went to India and China last month as European buyers searched for replacements and reached the United Arab Emirates for alternatives. The ensuing panic and diversion of global oil flows has boosted oil prices by more than 20 percent since late February, when Russia invaded Ukraine.
Refineries in Asia’s second largest oil consumer have increased profits by converting cheap crude oil into fuels that are sold domestically and also on the export market to customers in Europe and the US. Russian crude makes up only part of India’s total basket of crude oil commodities, alongside other long-term and spot purchases from the Middle East and Africa.
The potential increase in Russian crude oil purchases is likely to weigh on the South Asian country’s local imports, the people said. India bought more than 40 million barrels of Russian oil between late February and early May, which is about 20 percent more than the flow for all of 2021, according to Bloomberg’s calculations based on trade data. According to Kpler data, Russian oil supplies to India for May were 740,000 barrels per day, compared to 284,000 barrels in April and 34,000 barrels a year earlier.
While India’s purchases of Russian crude oil are not illegal or violating any sanctions, the country has come under pressure from the Biden administration and the EU to stop doing business with Moscow in order to restrict the Kremlin’s entry. to close oil revenues and funds. The Asian nation has reiterated that the volume of Russian imports is minuscule compared to purchases in Europe, and only a small part of the country’s total consumption.
Russian discounted oil has provided some relief in India — which imports more than 85 percent of its oil — just as inflation is skyrocketing, along with rising prices of everything from food to fuel. Access to cheap crude oil is boosting Indian oil imports, which grew nearly 16 percent in April from last year. The share of oil from the Eurasian region, to which Russia belongs, grew to 10.6 percent in April, from 3.3 percent a year earlier, according to data from the Oil Ministry.
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