Russia's state oil company Rosneft has agreed to supply about 500,000 barrels of oil per day to India's private oil refinery Reliance in the largest ever energy deal between the two countries, citing three sources familiar with the situation, Reuters reports, UNN writes.
Details
The 10-year deal is said to represent 0.5% of global supplies and is valued at about $13 billion a year at today's prices. "It will further strengthen the energy relationship between India and Russia, which is under severe Western sanctions over its invasion of Ukraine," the newspaper writes.
Reliance said that it works with international suppliers, including those from Russia, and the deals are based on market conditions. The company declined to comment further on commercial matters, citing the confidentiality of supply agreements. Rosneft, as indicated, did not respond to requests for comment.
The deal comes ahead of Russian dictator Vladimir Putin's planned visit to India and after US President-elect Donald Trump said he wants to push Moscow and Kyiv to end the war as soon as he takes office in January, the newspaper said.
Russian oil reportedly accounts for more than a third of India's energy imports. India has become the largest importer of Russian crude oil after the EU, which was previously the largest buyer, imposed sanctions on Russian oil imports in response to Russia's invasion of Ukraine in 2022.
India does not have sanctions on Russian oil, so refineries there have reportedly profited from cheaper oil supplies. Sanctions have made Russian oil cheaper than competing grades by at least $3-4 per barrel.
The growth of Russian imports to India has come at the expense of competing producers in the Middle East. The Reliance-Rosneft deal is said to be another challenge for competitors, including Saudi Arabia.
Competition among oil producers for a share of the Indian market is intense as it is one of the fastest growing energy markets and is becoming an increasingly important driver of global demand as growth in China, the largest importer, slows.
Under the terms of the agreement, Rosneft will supply 20-21 Aframax-sized shipments (from 80 ,000 to 100 ,000 metric tons) of various grades of Russian crude oil and three shipments of fuel oil of about 100 ,000 tons each each month.
The supplies will be made to Reliance's refinery complex, the world's largest, in Jamnagar in the western state of Gujarat.
Two sources said that Reliance and Rosneft will review prices and volumes annually under the agreement to take into account the dynamics of oil markets.
In 2024, Reliance signed an agreement with Rosneft to purchase 3 million barrels of oil per month. "Rosneft also regularly sells oil to Reliance through intermediaries.
The new deal covers about half of Rosneft's oil exports by sea from Russian ports, leaving little supply for other traders and intermediaries, one source said.
From January to October, Reliance imported an average of 405,000 barrels of Russian oil per day, up from 388,500 barrels per day in the same period last year, according to tanker data obtained from sources.
A new deal between Rosneft and Reliance was discussed and approved at a meeting of Rosneft's board of directors in November, two sources said.
The supply will start in January and will last for 10 years with an option to extend for another 10 years, the three sources said.
Most of the supply is said to be medium-sulfur and diesel-rich Russian Urals crude, which is the most popular among Indian refineries and will be sold at a $3 per barrel discount compared to Dubai prices next year, two sources said.
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