Reliance industries to purchase Russian oil in roubles
- In Reports
- 06:49 PM, May 29, 2024
- Myind Staff
India's Reliance Industries, operator of the world's largest refining complex, has signed a one-year agreement with Russia's Rosneft to purchase at least 3 million barrels of oil monthly in roubles. Four sources familiar with the matter informed Reuters about this development.
The decision to switch to rouble payments aligns with Russian President Vladimir Putin's initiative for Moscow and its trading partners to seek alternatives to the Western financial system, aiming to maintain trade despite U.S. and European sanctions.
Reliance Industries' term deal with Rosneft secures oil at discounted rates, particularly beneficial as the OPEC+ group of oil producers is expected to extend voluntary supply cuts beyond June. The OPEC+ group, which includes the Organisation of the Petroleum Exporting Countries (OPEC) and allies like Russia, will discuss these output cuts in an online meeting on June 2.
India, the world's third-largest oil importer and consumer, has emerged as the biggest buyer of seaborne Russian crude since the West halted purchases and imposed sanctions on Moscow following Russia's 2022 invasion of Ukraine. India has paid for Russian crude using various currencies, including rupees, dirhams, and Chinese yuan.
State-owned Indian refiners have been sourcing Russian oil from spot markets due to difficulties in finalising term supplies for this year, as previously reported by Reuters.
"India is a strategic partner for Rosneft oil company," Rosneft stated in an emailed response to questions from Reuters. The Russian company declined to comment on confidential agreements with partners.
Rosneft highlighted that cooperation with Indian companies spans production, oil refining, and the trading of oil and petroleum products.
Rosneft stated that its commercial approaches for determining crude oil value are consistent for all companies, whether private or state-controlled. Reliance did not respond to a request for comment.
Under the deal, effective from April 1, the beginning of the Indian financial year, Reliance will buy two cargoes of approximately one million barrels of Urals crude each, with an option to purchase four more monthly at a discount of $3 per barrel to the Middle East Dubai benchmark, sources said.
Additionally, Reliance will purchase one to two cargoes a month of low-sulphur crude oil, primarily ESPO Blend from Russia's Pacific port of Kozmino, at a premium of $1 per barrel to Dubai quotes, sources added.
Reliance has agreed to pay for the oil in roubles, using India's HDFC Bank and Russia's Gazprombank. Further details on the payment mechanism were not immediately available. Both HDFC Bank and Gazprombank did not respond to requests for comment.
Image source: Reuters
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