28 Jul 2023 , 12:14 PM
Bharat Petroleum Corp (BPCL) continues to be in discussions with Russian oil major Rosneft regarding a potential oil purchase deal, according to Vetsa Ramakrishna Gupta, the company’s head of finance. However, the negotiations have not yet been concluded.
The talks come amidst narrowing discounts on Russian oil compared to previous quarters, as highlighted by Gupta during an analysts’ conference after BPCL’s June quarter earnings report.
Indian refiners have been taking advantage of discounted Russian oil, particularly since other countries imposed sanctions on Moscow following its invasion of Ukraine. The discounted prices have made Russian oil more cost-effective than similar grades from the Middle East.
However, Gupta mentioned that discounts on Russian oil are shrinking, making the advantage of purchasing Russian crude less appealing if the discount continues to diminish, as per sources and information.
Russian Urals oil prices for August loading reportedly jumped above the $60 per barrel price cap due to narrowing discounts and tightening supply, according to sources.
Indian government officials expressed concerns last month that the narrowing discounts and payment issues could impact India’s Russian oil imports.
The narrowing of discounts is partly attributed to OPEC+’s decision to cut oil output. BPCL has mostly been procuring Russian oil at or below the $60 per barrel price cap set by the European Union and the G7 nations to limit Russia’s oil revenue.
Gupta assured that BPCL had managed to settle payments for Russian oil so far, despite encountering problems earlier when the cost exceeded the price cap level. The company remains optimistic that more banks are ready for settlement, reducing concerns about payment issues. However, they acknowledge the need to monitor any potential problems in purchases beyond the price cap.
BPCL, India’s second-largest state refiner, can utilize approximately 30%-40% of Russian oil for its three refineries with a combined capacity of 726,000 barrels per day.
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