Reliance to purchase Russian oil in Roubles

It is likely to purchase 1-2 cargoes a month of low-sulfur crude oil
Image used for representational purposes only.
Image used for representational purposes only.Wikimedia Commons

NEW DELHI: Reliance Industries Limited (RIL), operator of the world’s biggest refining complex, is believed to have signed a deal with Russia’s Rosneft to buy at least 3 million barrels of oil a month in Roubles for the next year.

According to a report, citing sources, RIL will buy two cargoes of about one million barrels of Urals crude with the option to buy four more each month at a discount of $3 a barrel to the Middle East Dubai benchmark, from this financial year onwards.

After Western countries shunned Russian crude following the Russia-Ukraine war, Russia diversified its supply to India and China. Both countries emerged as the biggest beneficiaries of Russian-discounted crude.

The oil-to-telecom conglomerate owned by billionaire Mukesh Ambani houses two refining plants in its complex, with a combined capacity of about 1.4 million barrels per day.

It is reported that Reliance will purchase 1-2 cargoes a month of low-sulfur crude oil, mainly ESPO Blend exported from Russia’s Pacific port of Kozmino, at a premium of $1 a barrel, according to reports.

The company will make payment for the oil using Russia’s rouble through India’s HDFC Bank and Russia’s Gazprombank. It is believed that the term deal will help Reliance secure oil at discounted rates at a time when the OPEC+ group of oil producers is expected to extend voluntary supply cuts beyond June.

The OPEC+ group, comprising the Organisation of the Petroleum Exporting Countries (OPEC) and allies including Russia, is due to discuss the output cuts in an online meeting on June 2.

The quantum of discounts on Russian crude has come down from $8–10 a barrel last year to around $3–5 a barrel this year.

Rating agency ICRA mentioned that the discounted crude from Russia has led to savings in India’s oil import bill amounting to $5.1 billion in FY2023 and $7.9 billion in the 11 months of FY24.

The Indian government was pushing for the purchase of Russian crude in Indian currency. However, due to reluctance of Russian crude sellers, and Russian banks to trade in rupee, those efforts failed to yield any result.

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