(Oil Price) – 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 worth roughly $13 billion a year 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, we reported that India is likely to resort to buying more Russian energy commodities due to the ongoing turmoil in the Middle East. Back in July, India became the world’s biggest importer of Russian oil, surpassing China. Data on Indian shipments from trade and industry showed that the country imported 2.07 million barrels per day (bpd) of Russian crude in July, good for a 4.2% M/M and 12% Y/Y increase. That exceeded China’s July oil imports 1.76 million bpd via pipelines and shipments, based on Chinese customs data.
Indian refiners have been buying Russian crude at a discount to Brent ever since Western nations curtailed imports of Russian energy commodities following its invasion of Ukraine. India’s purchase of Russian ESPO Blend crude jumped in July to 188,000 bpd as larger Suezmax vessels were used. Refiners in northeast China are typically the biggest ESPO buyers thanks to their close proximity to Russia; however, 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.
India is also trying to diversify its oil supply in a bid to improve the country’s energy security. Last month, Indian Prime Minister Narendra Modi said during a visit to Guyana that his government views Guyana as key to India’s energy security. Modi told a special sitting of Parliament that he views Guyana as an important energy source and that he will encourage large Indian businesses to invest in the country.
Guyana did not immediately grant Modi’s wish, with India’s External Affairs Minister Jaideep Mazumdar saying talks will continue and that such a deal would ensure “greater predictability.”
By Alex Kimani for Oilprice.com
