Key Points
- Rosneft will supply 500,000 bpd of crude to Reliance.
- India surpasses China as the world’s top Russian oil importer.
- India seeks to diversify energy supply with Guyana partnership.
The largest oil supply arrangement between India and Russia was announced by Reuters on Thursday. Rosneft, the Russian state oil corporation, has inked a 10-year contract to provide over 500,000 barrels per day (bpd) of crude oil to Reliance Industries in India.
Rosneft, Reliance seal $130B oil supply deal
Under the agreement, Rosneft will provide 20 to 21 Aframax-sized cargoes (80,000 to 100,000 metric tons) of different Russian oil grades each month, with an estimated yearly value of $13 billion at current prices.
Additionally, it will provide roughly 100,000 tons of fuel oil in three monthly cargoes.
The deal comes as continued volatility in the Middle East causes India to become more dependent on Russian petroleum. According to trade and industry figures, India surpassed China as the world’s largest importer of Russian oil in July, bringing in 2.07 million barrels per day, a 12% increase year over year and a 4.2% increase month over month. By contrast, according to Chinese customs data, China imported 1.76 million bpd through pipelines and shipping.
According to Oil price, after Russia was sanctioned by the West for its invasion of Ukraine, Indian refiners benefited from cheaper Russian oil. Due to the employment of larger Suezmax tankers to transport the shipments, India’s July imports of Russian ESPO Blend crude increased to 188,000 barrels per day.
As long as sanctions don’t become worse, India’s need for Russian oil will increase, a refinery source in India told Reuters.
To improve national energy security, India is also attempting to diversify its energy sources. Indian Prime Minister Narendra Modi referred to Guyana as a crucial component of India’s energy policy during a visit there last month. He called Guyana a significant source of energy for the future and urged Indian companies to invest there.
India’s energy security strategy extends beyond Russian oil
India’s External Affairs Minister Jaideep Mazumdar stated that talks will go on even though no agreement was reached, stressing that a supply agreement would provide “more predictability” for India’s energy imports.
This historic agreement between Rosneft and Reliance increases India’s access to cheap Russian oil as it looks at other energy alliances to lessen its dependency on any one supplier.
