In a landmark energy deal, Russian state oil giant Rosneft has agreed to supply 500,000 barrels per day (bpd) of crude to Indian private refiner Reliance Industries, according to Reuters. Valued at approximately $13 billion annually at current market prices, the 10-year agreement represents the largest energy partnership between India and Russia, sources familiar with the deal revealed.
Key Highlights of the Deal:
- Volume: The agreement covers about 0.5% of global crude supply, delivering 20-21 Aframax-sized cargoes of Russian crude grades and three 100,000-ton fuel oil shipments monthly.
- Duration: Supplies will begin in January 2025 and continue for 10 years, with an option for a 10-year extension.
- Pricing: Crude will be priced based on Dubai quotes, with Russian Urals offered at a discount of $3 per barrel and light grades like ESPO and Sokol priced at premiums of $1.50 to $2 per barrel.
- Destination: The crude will supply Reliance’s Jamnagar refining complex in Gujarat, the world’s largest refinery.
This agreement strengthens India-Russia energy ties amidst Western sanctions on Moscow over the Ukraine conflict. India, now the largest importer of Russian crude, has benefited from discounted oil, securing cheaper supplies compared to Middle Eastern grades.
Strategic Context:
- Competition: The deal intensifies competition among oil exporters vying for a share of India’s fast-growing energy market, further challenging rivals like Saudi Arabia.
- Market Dynamics: Reliance and Rosneft will review pricing and volumes annually, adapting to oil market fluctuations.
- Political Backdrop: The agreement coincides with an upcoming visit by Russian President Vladimir Putin to India and renewed efforts by U.S. President-elect Donald Trump to mediate the Russia-Ukraine war.
With this partnership, Reliance ensures a steady supply of discounted Russian crude, strengthening its position in India’s burgeoning energy market.
