Indian refiners are negotiating a six-month oil deal with Russia to import millions of barrels a month, multiple sources with knowledge of the matter said, as the world’s third-largest importer seeks more Russian crude despite Western sanctions.
According to calculations by Reuters, India has already bought more than twice as much crude oil from Russia in the two months since its invasion of Ukraine on February 24 as it did in all of 2021. Russia calls the attack a “special military operation” to disarm Ukraine.
Western sanctions against Russia have caused many oil importers to avoid trading with Moscow, driving spot prices for Russian crude to record discounts versus other grades.
Rosneft is in talks with Indian and Chinese companies over supply deals after the company lost Western buyers, two sources said.
Although New Delhi has called for an immediate ceasefire in Ukraine, it has not explicitly condemned Moscow’s actions.
This presented Indian refiners, who rarely bought Russian oil, with an opportunity to snag cheap crude.
India’s top refiner Indian Oil Corp. (IOC), Bharat Petroleum Corp and Hindustan Petroleum Corp are negotiating the deal with Russia’s Rosneft, the sources said.
The IOC is negotiating a deal to import 6 million barrels of oil per month with an option to buy another 3 million barrels, they said. BPCL and HPCL are targeting monthly imports of 4 million barrels and 3 million barrels, respectively, the sources said.
The companies are looking for shipments from June, they said, adding Rosneft can supply oil through unsanctioned intermediaries and trading firms based in countries that have not announced sanctions against Moscow.
One of the sources said that the volume and duration of the deals could change depending on the discounts offered by Rosneft and the impact of sanctions.
Indian refiners did not respond to Reuters emails seeking comment, while no immediate comment was available from Rosneft.
Since the Ukraine crisis, Indian refiners have been buying Russian oil from global traders on a consignment basis, with traders arranging shipping and insurance.
However, global traders Vitol and Trafigura are halting Russian oil purchases as EU sanctions come into effect on May 15.
India has also had shipping problems recently as the Oil and Natural Gas Corp (ONGC) struggled to find ships to load crude oil from its Sakhalin-1 operations in Russia.
India imports more than 85% of its crude oil needs at 5 million barrels per day (bpd).
Oil Minister Hardeep Singh Puri defended India’s oil imports from Russia, saying last week the purchases account for a fraction of India’s total annual needs and the government does not intervene in companies’ import deals.
New Delhi has also asked its state-owned energy companies to explore the possibility of buying European oil giant BP’s stake in sanctions-hit Russian firm Rosneft, two people familiar with the matter told Reuters.
Washington has said it does not object to New Delhi buying Russian oil below market prices, but has warned imports could surge because it could hamper the US response to the war in Ukraine.
