Moscow (Agencies): Russia’s state oil firm Rosneft has agreed to supply nearly 500,000 barrels per day (bpd) of crude to India’s Reliance Industries in the biggest oil supply deal between the two countries, Reuters reported on Thursday.
The 10-year agreement is valued at approximately $13 billion annually at current prices. Under the deal, Rosneft will deliver 20-21 Aframax-sized cargoes (80,000 to 100,000 metric tons) of various Russian crude grades and three cargoes of about 100,000 tons each of fuel oil each month.
Previously, it was reported that India is likely to increase its purchase of Russian energy commodities due to ongoing turmoil in the Middle East. Back in July, India became the world’s largest importer of Russian oil, surpassing China. Data from Indian trade and industry showed that the country imported 2.07 million barrels per day (bpd) of Russian crude in July, marking a 4.2% month-on-month and 12% year-on-year increase. This exceeded China’s July oil imports of 1.76 million bpd via pipelines and shipments, according to Chinese customs data.
Indian refiners have been buying Russian crude at a discount to Brent since Western nations curtailed imports of Russian energy commodities following Russia’s invasion of Ukraine. India’s purchase of Russian ESPO Blend crude surged in July to 188,000 bpd as larger Suezmax vessels were used. While refiners in northeast China are typically the biggest ESPO buyers due to their proximity to Russia, they are now buying less due to tepid fuel demand.
“India’s requirement for Russian oil is going to go up as long as there are no further tightening of sanctions,” an Indian refining source told Reuters.
In addition, India is making efforts to diversify its oil supply to enhance the country’s energy security. Last month, Indian Prime Minister Narendra Modi stated during a visit to Guyana that his government views Guyana as crucial to India’s energy security. Modi indicated during a special sitting of Parliament that he encourages large Indian businesses to invest in Guyana.
Guyana did not immediately agree to Modi’s proposal, with India’s External Affairs Minister Jaideep Mazumdar mentioning that talks will continue and that such a deal would ensure “greater predictability.”