Rosneft to Supply 500,000 BPD to India’s Reliance Industries in Historic Deal

Russia’s state-owned oil company, Rosneft, has finalised a landmark agreement to supply nearly 500,000 barrels of crude oil daily to India’s Reliance Industries. This deal, reported by Reuters on Thursday, marks the largest oil supply partnership between the two nations.

The 10-year contract, valued at approximately $13 billion annually at current market prices, will see Rosneft delivering 20-21 Aframax-sized shipments (each carrying 80,000 to 100,000 metric tons) of various Russian crude grades monthly. Additionally, three cargoes of roughly 100,000 tons of fuel oil will also be supplied each month under the agreement.

India’s growing reliance on Russian energy commodities comes amid escalating tensions in the Middle East. In July, India surpassed China to become the world’s largest importer of Russian oil.

Data from trade and industry sources revealed that India imported 2.07 million barrels per day (bpd) of Russian crude that month, reflecting a 4.2% month-on-month and 12% year-on-year increase. Comparatively, China imported 1.76 million bpd of Russian oil in July via pipelines and shipments, according to Chinese customs figures.

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 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.”