Reuters reported that Rosneft, a Russian oil company, has agreed to sell Reliance private refiners in India nearly 500,000 barrels of crude oil per day. This is the largest energy deal ever between the two nations.
According to the report, the agreement will last for 10 years and supply 0.5% of global supply. At today’s prices, it will be worth around $13 billion per year.
Despite heavy sanctions by the West, Russia remains India’s largest crude oil supplier.
Western powers, such as the US or Europe, imposed severe sanctions on Russia for its oil and gas sanctions after Moscow invaded Ukraine early in 2022.
India became one of the main destinations for Russian crude oil in March 2022. Moscow was responsible for only 2% of India’s crude oil imports before the invasion of Ukraine.
Reliance said to Reuters that it works with international suppliers, including Russia, where deals are based on the market conditions.
The agreement comes before the visit to India of Russian President Vladimir Putin and after Donald Trump, US President-elect Donald Trump, said that he wanted to press Moscow and Kyiv for an end to their almost three-year-old conflict once he took office.
More than a third (35%) of India’s imports come from Russia
Vortexa data shows that more than one third of India’s imports of oil come from Russia.
In 2022, Russia was the largest crude oil supplier to India.
India does not have sanctions against Russian oil. Refiners are therefore able to benefit from the lower price of crude oil. According to Reuters sanctions have reduced the price of Russian oil by $3 to 4 per barrel compared to other grades.
According to the report, the Reliance/Rosneft deal would create new challenges for competitors including Saudi Arabia.
The competition for the Indian market is fierce, as it’s one of the most rapidly-consuming markets.
According to the Organization of the Petroleum Exporting Countries (OPEC), India is expected dethrone China in the next few years as the largest driver of crude oil consumption.
Rosneft to deliver 20-21 Aframax-sized cargoes
According to Reuters, Rosneft agreed to deliver to Reliance 20-21 Aframax cargoes of various crude grades, weighing between 80,000 and 100,000 tons.
Every month, it would also deliver three cargoes of approximately 100,000 tons of fuel oil each.
Reliance will deliver the shipments to its largest refinery in the world, located in Jamnagar, Gujarat.
According to the report, both companies will examine oil prices and volumes each year in order to evaluate market dynamics.
The report states that the new agreement would account for almost half of Rosneft’s seaborne oil exported from Russian ports. The remaining supply would be very limited for other traders or middlemen.
Start of shipments in January
Rosneft has agreed to supply oil to Reliance starting in January.
Reuters reported that the new agreement between Rosneft, Reliance and BP was discussed and approved at Rosneft’s board meeting held in November.
Reports claimed that the agreement would last for ten years with the option of extending it for an additional ten years.
Reuters reported that the pricing for the grades to delivered on a monthly basis will be set at a differential to the average Dubai prices of the loading months.
The report stated that premiums for light sweet grades for ESPO were around $1.50 a barrel, Sokol was around $2 a barrel and Siberian Light was around $1 a barrel compared to Dubai’s quotes for 2025.
Most of the shipments will be Russian Urals rich in diesel and medium sulphur, which is popular among Indian refiners. Reuters reported that these will be sold at a discount of $3 per barrel compared to Dubai benchmarks.
This post Rosneft and Reliance strike largest ever energy deal between India & Russia appeared first on ICD
This site is for entertainment only. Click here to read more
