Deliveries of Russian Sokol crude oil to the Indian Oil Corporation (IOC) have been delayed due to payment problems, forcing India's largest refiner to use its reserves and buy more oil from the Middle East, Reuters reports, citing sources familiar with the situation, UNN writes.
Details
IOC is the only state-owned refinery that has signed a one-year deal to buy various Russian crude grades, including Sokol, from Russian oil company Rosneft. The Sokol oil for IOC is supplied by Sakhalin-1 LLC, a unit of Rosneft, the sources said.
Indian state-owned refiners are settling oil trade with Russia in United Arab Emirates dirhams after the government advised them not to use the Chinese yuan, although private refineries still pay in yuan due to lack of alternative.
The IOC's payments for Sokol oil were hampered because Sakhalin-1 was unable to open a bank account in the UAE to accept payments in dirhams, the sources said.
According to the shipment data, IOC was to receive six cargoes of Sokol oil from late November to December. This included the NS Century, which came under US sanctions last month.
The data shows that these cargoes are now mainly running around India and Sri Lanka, while NS Century is heading to Singapore.
"The supplier intends to supply crude oil. I hope a solution will be found soon," one of the sources said.
AddendumAddendum
India has become the largest buyer of offshore oil from Russia following the retreat of European buyers after Russia's invasion of Ukraine last year.
India's oil ministry has told a parliamentary commission that state-owned oil companies are facing difficulties in paying for Russian oil because not all Indian banks can process payments for Russian oil in US dollars, according to a report presented in parliament last week.
Indian refineries are buying Russian oil on a supply basis amid sanctions. Last year, India created a mechanism for paying in rupees for imports, including crude oil.
However, suppliers have expressed concern about the repatriation of funds and the high costs associated with the conversion of funds, as well as the risks of exchange rate fluctuations, the ministry told the parliamentary commission.
They added that suppliers have asked the IOC to bear the additional transaction costs of accepting payments in rupees.
The ministry also told the commission that Indian refineries are adhering to the $60 per barrel price ceiling set by the G7 countries for oil in Russian ports.