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Russian oil: India's state oil refiners in talks with Rosneft to secure Russian crude for long term

All three of India’s state oil refiners are in talks with Rosneft Oil Co PJSC to secure long-term supplies of Russian crude, an effort to move away from one-off purchases that have left them vulnerable to competition.

Indian Oil Corp, Bharat Petroleum Corp and Hindustan Petroleum Corp are in discussions, said people familiar with the matter, but talks have been drawn out as the buyers are seeking clauses to protect them from exits and penalties, should payment issues delay cargoes.

In total, Indian refiners want to lock in about 500,000 barrels per day of Russian crude supplies, said the people, who could not be identified as negotiations are private.

India, the world’s third-largest crude importer, has long leaned on Middle Eastern nations for its supply of feedstock. The country’s imports from Russia only surged after the invasion of Ukraine in 2022, when New Delhi saw an opportunity to secure cheaper barrels. The flow of Russian oil has dropped off in recent months, though, because of narrowing discounts as well as more frequent payment and other issues, as the US ramps up enforcement of a $60-a-barrel price cap.

Aside from India, China is one of the world’s top buyers of Russian crude. The North Asian country was recently quick to pick up extra cargoes of a grade known as Sokol, when India was unable to take delivery of several shipments.

Indian Oil signed its first term contract with Rosneft in 2020 as part of the country’s effort to diversify its crude supply. The deal only became economically attractive in 2022, with the two companies agreeing to substantially increase flows in 2023. BPCL and HPCL don’t have existing long-term contracts with Rosneft.

This week, the South Asian nation is hosting an annual oil and gas gathering in Goa with a far smaller Russian presence as compared with last year. Rosneft’s Chief Executive Igor Sechin, initially listed on the program line-up as a participant in a panel discussion, was later removed as Moscow sought to keep a low profile.

Indian Oil, Bharat Petroleum and Hindustan Petroleum didn’t immediately respond to requests for comment.