The Indian government is looking for a long-term contract that would ensure a stable and favorable price for Russian oil
India is stepping up efforts to secure a long-term deal for crude oil purchases from Russia by the next fiscal year, which starts in April, Business Standard has reported citing sources in the petroleum ministry. A group of state-owned refiners has been involved in the discussions for months and will be urged to expedite talks, the sources told the newspaper.
Crude oil from Russia is typically purchased at spot prices, the publication said. A long-term agreement would reduce price volatility for Russian oil and may allow India to maintain steady access to Russian crude at lower prices.
Oil prices have declined over the past six months, despite repeated outbreaks of violence in the Middle East. At the same time, while global demand growth estimates are being revised downward, India remains the only major economy forecasted to have stable and growing demand, a source told the outlet. “These factors have strengthened the position of Indian oil buyers in any ongoing negotiations,” he asserted.
This development comes just days after reports emerged that India’s largest privately owned oil and gas company, Reliance Industries (RIL), signed a long-term deal with Russian state oil firm Rosneft to supply record volumes of crude oil.
Rosneft has agreed to supply nearly 500,000 barrels per day of various grades to Reliance, according to Reuters, with the deal estimated at around $13 billion a year at current prices. The new deal reportedly accounts for roughly a half of Rosneft’s seaborne oil exports from Russian ports and amounts to 0.5% of global supply.
Russia is now the largest oil supplier to India, accounting for up to 40% of its overall crude imports. Deliveries doubled last year to $45 billion, Russia’s envoy to India, Denis Alipov, stated last week. New Delhi has ramped up purchases of crude oil from Russia in the past two years despite tremendous pressure from the West.
New Delhi says its policy is driven by national interests as the world’s most populous country in order to maintain high economic growth. Indian Petroleum and Natural Gas Minister Hardeep Singh Puri has stated that India is willing to continue purchasing oil from Russia as long as the pricing and terms are favorable.
