Rosneft, Russia’s largest and most valuable state oil company, has agreed to supply nearly 500,000 barrels of crude oil daily to India’s Reliance Industries, which operates the world’s largest refinery, making the largest energy deal ever between India and Russia, valued at $13 billion per year. at current prices.
Supplies for the 10-year agreement will begin shipping in January 2025 and there is an option to extend the agreement for an additional 10 years. The deal will represent 0.5% of global supply and about half of Rosneft’s seaborne oil exports from Russian ports.
Importantly, this agreement comes ahead of Russian President Vladimir Putin’s planned visit to India in early 2025 at the invitation of the Indian Prime Minister, marking the first visit since the Ukraine conflict and after US President-elect Donald Trump’s statement that it would end the conflict. war when he takes office in January 2025.
Western sanctions have led to a significant drop in the price of Russian oil, making it at least $3 to $4 per barrel cheaper than competing grades. In July 2024, India overtook China to become the world’s largest importer of Russian oil, which now accounts for more than a third of its energy imports.
Previously, India facilitated payments for Russian crude in rupees, dirhams and Chinese yuan. Reliance Industries agreed to settle oil payments in rubles, using Indian bank HDFC and Russian bank Gazprombank for the transactions.
The Reliance-Rosneft deal poses a challenge to competitors, including Saudi Arabia, as India tries to diversify its oil imports to countries like Russia and Guyana.
Under the terms of the agreement, Rosneft will supply 20 to 21 Aframax-sized cargoes (ranging from 80,000 to 100,000 tonnes) of different grades of Russian crude each month, as well as three cargoes of around 100,000 tonnes each of fuel oil to the Reliance’s Jamnagar refinery in Gujarat. . The price of supplied qualities is based on deviations from the average Dubai price for the loading month. Premiums set for light sweet grades are around $1.50 per barrel for ESPO, around $2 per barrel for Sokol and around $1 per barrel for Siberian Light, relative to Dubai quotations for 2025 .