Reliance, Rosneft sign agreement for oil trade in roubles

29 May 2024 , 02:12 PM

India’s Reliance Industries, operator of the world’s biggest refining complex, has entered into a one-year deal with Russia’s Rosneft to acquire at least 3 million barrels of oil a month in Roubles, revealed sources.

The transition to Rouble payments follows Russian President Vladimir Putin’s desire for Moscow and its trading partners to find alternatives to the Western financial system to facilitate trade despite U.S. and European sanctions.

A term arrangement with Rosneft also allows privately held Reliance to get oil at lower prices at a time when the OPEC+ group of oil producers is set to continue voluntary production restrictions beyond June.

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

India, the world’s third-largest oil importer and user, has become the biggest buyer of seaborne Russian crude since the West froze purchases and implemented sanctions against Moscow in the aftermath of Russia’s 2022 invasion of Ukraine.

Meanwhile, state-owned Indian refiners have been turning to spot markets for Russian oil because they were unable to finalise term supplies for this year, according to sources.

According to the terms of the agreement, which went into effect at the start of the Indian fiscal year on April 1, Reliance will buy two cargoes of about one million barrels of Urals crude, with the option to buy four more each month at a $3 per barrel discount to the Middle East Dubai benchmark, according to sources.

The refiner would also purchase one to two cargoes a month of low-sulphur crude oil, mostly ESPO Blend exported from Russia’s Pacific port of Kozmino, at a premium of $1 a barrel to Dubai rates, the sources noted.

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