Bharat’s Reliance Industries, which operates the world’s largest refining complex, has signed a new deal with Russia’s Rosneft to buy oil. The deal lasts for one year and involves purchasing at least 3 million barrels of oil each month. The payment will be made in Russian roubles, according to four sources who spoke to Reuters.
This move to pay in roubles comes after Russian President Vladimir Putin urged Russia and its trading partners to use alternatives to the Western financial system. This push aims to continue trade despite sanctions from the U.S. and Europe.
The deal with Rosneft helps Reliance secure oil at discounted prices. This is particularly important now because the OPEC+ group, which includes the Organisation of the Petroleum Exporting Countries (OPEC) and allies like Russia, is likely to extend supply cuts. These cuts are expected to continue beyond June, making it crucial for companies like Reliance to find stable and affordable oil sources.
The OPEC+ group is scheduled to discuss these output cuts in an online meeting on June 2. Decisions made in this meeting could impact global oil supply and prices.
Bharat’s Role in Russian Oil Trade
Bharat, which is the world’s third-largest oil importer and consumer, has become the biggest buyer of Russian seaborne crude oil. This shift happened after Western countries stopped buying Russian oil and imposed sanctions following Russia’s 2022 invasion of Ukraine. Bharat has been paying for Russian oil in various currencies, including rupees, dirhams, and Chinese yuan.
While privately-run Reliance has secured a term deal, state-owned Bharatiya refiners have been buying Russian oil from spot markets. They have not yet been able to finalize long-term supply agreements for this year, as previously reported by Reuters.
Rosneft described Bharat as a strategic partner but did not comment on the specifics of the deal, citing confidentiality. The company noted that its commercial practices are the same for all partners, whether private or state-controlled.
Details of the Deal
Under the new agreement, which began on April 1, the start of Bharat’s financial year, Reliance will buy two cargoes of about one million barrels of Urals crude each month. They have the option to buy four more cargoes at a discount of $3 per barrel compared to the Middle East Dubai benchmark.
In addition, Reliance will purchase one to two cargoes of low-sulphur crude oil, mainly the ESPO Blend, at a premium of $1 per barrel to Dubai quotes.
Payments for the oil will be made in Russian roubles through Bharat’s HDFC Bank and Russia’s Gazprombank. Further details on the payment process were not immediately available. Both HDFC Bank and Gazprombank did not respond to requests for comment.
This deal underscores the ongoing economic ties between Bharat and Russia, even as global political dynamics continue to evolve.
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