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India's state-run oil refiners are avoiding contracted Russian crude delivery as the once-thriving trade becomes more difficult due to stricter US sanctions enforcement.
Indian Oil Corp., the largest state-owned refiner, will likely reduce the amount of crude received under the so-called term supply, while Bharat Petroleum Corp. and Hindustan Petroleum Corp. have decided not to make firm commitments to take contracted oil next fiscal year, according to six people familiar with the matter, who asked not to be identified because the information is private.
The three refiners had been in talks with Russia’s Rosneft PJSC to secure about 500,000 barrels a day — equivalent to a third of India’s daily imports — to try and reduce reliance on one-off purchases that are often more expensive. The lukewarm response to a suggested contract clause that would address supply disruptions added to the caution from Indian refiners, the people said.
India is cautious on contracted Russian oil as US sanctions bite.
Indian Oil has a long-term deal with Rosneft, but contracted supply would have been a first for HPCL and BPCL.
Russia is still the most prominent supplier to India, but there are signs refiners are buying more from other producers, including Saudi Arabia. The state-owned companies are also seeking contracted crude from the Middle East and West Africa, but the deals are likely to be more expensive than Russian oil, the people said.
State refiners are expected to meet 40% of their crude needs in the financial year starting April 1 through one-off purchases, or spot deals, meaning big volumes of oil from Russia could still flow to India, four of the people said.
Last year, Indian Oil entered into a series of deals with Rosneft, Sakhalin-1 LLC and Gazprom Neft PJSC to take 24.5 million tonnes, or 492,000 barrels a day, for the year ending March 31, two of the people said. That compares with a pre-war contract with Rosneft in 2021 to take 2 million tonnes over a year.
Also Read : India's LNG imports to fall to 45% by FY26 amid rise in domestic production India reached a 12-month high in June imports of crude oil from Russia
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