Indian refineries are getting their hands on cheap Russian oil, which has been shunned by Western companies and countries since Moscow imposed sanctions on February 24 for the invasion of Ukraine, which Russia calls a “special military operation.”
A lack of new supply deals with Rosneft could push Indian refiners to turn to the spot market for more expensive oil. It also indicates that Russia has managed to continue exporting its oil despite mounting pressure from Western sanctions to choke Moscow’s revenues.
Attracted by the rebates offered, three Indian state-owned refiners — Bharat Petroleum Corp and — began negotiations with Rosneft earlier this year for six-month supply agreements.
Only so far
, the country’s largest refinery, has signed a deal with Rosneft under which it will buy 6 million barrels of Russian oil each month, with an option to buy 3 million more barrels. The requests from the other two refineries have since been rejected by the Russian producer, the sources said.
Rosneft is non-binding when signing a contract with
and . They say they have no volumes,” said one of the sources.
Sources said the contract with IOC included payment in all major currencies, such as rupees, dollars and euros, depending on the payment mechanism available at the time of the transaction.
Rosneft, IOC, HPCL and BPCL did not respond to Reuters’ requests for comment.
Russia is increasing oil exports from its main eastern port of Kozmino by about a fifth to meet rising demand from Asian buyers and offset the impact of European Union sanctions.
Trading sources said Rosneft is pushing barrels into the markets through trading firms such as Everest Energy, Coral Energy, Bellatrix and Sunrise.
Bellatrix and Sunrise were not available for comment, while Coral and Everest did not respond to an email from Reuters asking for comment.
According to the shipping data cited by two traders in the Urals market, all four trading firms acted as suppliers of crude oil purchased from Rosneft to India.
China has also ramped up its purchases from Russia. Rosneft awarded 900,000 tons (6.66 million barrels) of ESPO Blend crude oil to Unipec, the trading arm of top Asian refinery Sinopec Corp., in June, according to four traders.
Indian sources said Russian oil is no longer heavily discounted and they are getting fewer offers for sale on a Delivered At Port (DAP) basis, an international commercial term where the seller pays for insurance and freight and ownership only to the buyer is transferred. after the cargo is unloaded.
“Previously, the companies offered good discounts, but that is not available now. Offers have been reduced and discounts are not as good as before as insurance and freight rates have increased,” said another source.
The European Union, which dominates the international maritime market along with Britain and the United States, announced last week an immediate ban on new insurance contracts for ships carrying Russian oil, and gave a six-month grace period for existing contracts.
The lack of shipping insurance coverage has hit the IOC’s purchases of Russian oil under a contract it signed with Rosneft last year, sources said.
The contract gives IOC an option to buy 2 million tons of oil from Rosneft on a free-on-board (FOB) basis, meaning the buyer will have to charter ships and pay insurance to load the cargoes from Russia.
India largely buys Russian Ural oil, but the most recent IOC deal includes an option to supply ESPO Blend from Russia’s port of Kozmino and Sokol grade from Sakhalin, one of the sources said.
Indian refineries, however, continue to get some volumes from the spot markets, and HPCL and BPCL could get about 1 million to 2 million barrels of Russian oil in July, the sources said.