Rosneft, Russia’s largest and most valuable state oil company, has agreed to supply nearly 500,000 barrels of crude oil per day to India’s Reliance Industries, which operates the world’s largest refinery, marking the largest energy deal between India and Russia ever worth $13 billion annually. At current prices.
Supplies for the 10-year deal will begin shipping in January 2025, and there is an option to extend the agreement for another 10 years. This agreement will account for 0.5% of global supplies and about half of Rosneft’s seaborne oil exports from Russian ports.
It is worth noting that this deal comes before the scheduled visit of Russian President Vladimir Putin to India in early 2025 at the invitation of the Indian Prime Minister, which is the first visit since the conflict in Ukraine and after the statement of US President-elect Donald Trump that he will end the war. War when he takes office in January 2025.
Western sanctions led to a significant decline in Russian oil prices, making it at least $3 to $4 per barrel cheaper than competing grades. As of July 2024, India has overtaken China to become the world’s largest importer of Russian oil, which now accounts for more than a third of its energy imports.
Previously, India facilitated payment for Russian crude in rupees, dirhams and Chinese yuan. Reliance Industries agreed to settle oil payments in rubles, tapping India’s HDFC Bank and Russia’s Gazprom Bank in the transactions.
The Reliance and Rosneft deal represents a challenge for rivals, including Saudi Arabia, as India tries to diversify its oil imports to countries such as Russia and Guyana.
Under the agreement, Rosneft will supply 20 to 21 Aframax-sized cargoes (ranging from 80,000 to 100,000 metric tons) of various grades of Russian crude, along with three shipments each amounting to approximately 100,000 tons of fuel oil, each month to the Jamnagar refinery. Subsidiary of Reliance in Gujarat. . Prices for grades supplied are based on variances with the average Dubai price for the month of loading. The premiums set for light sweet grades are about $1.50 per barrel for ESPO, about $2 per barrel for Sokol, and about $1 per barrel for Siberian Light, versus 2025 Dubai prices.
